Should You Buy A Home Or Should You Keep On Renting?

If you currently don't own your own home you might be wondering.... should I take on a mortgage loan and buy a house or should I just keep renting?

To figure the question out of mortgage loan or rent, you need to do an analysis on the cash flows of buying a home and mortgage verses renting. Also you would need to determine the length of time that you plan to live in the home or area.

The cash outflows from renting would be:

1. A security deposit
2. Utilities
3. Monthly rent.

The cash inflows would be:

1. The deposit returned when you leave
2. Any monthly savings in the difference of a lower rent payment verses a home payment.

When buying a house the cash outflows include:

1. The down payment on the house
2. Points, closing costs
3. Mortgage payment
4. Property taxes
5. Insurance
6. Home maintenance costs
7. Utilities
8. If the house eventually sells for less than the purchase price.

The cash inflows :

1. Tax deductions for interest, points, and property taxes
2. Any rental income from the home
3. The appreciated value if the home sells for more than the purchase price.

Also consider the length of time that you plan to stay in the area. If you plan to stay for many years then buying a home might have an advantage--a fixed rate monthly mortgage payment will stay pretty much the same over the course of time that you spend there where your rent payment will increase to keep up with the rising rate of inflation and the supply and demand of apartments or rentals.

If you plan to stay a short period of time then renting might be a better option because of the cost of the down payment,points and fees associated with buying the home.

Stretching Your Retirement Buck--The Reverse Mortgage

As my mom spins into retirement she is on a never ending quest to increase her retirement income and make her life more enjoyable. At some point I suggested that she check out reverse mortgages and see if that would work out for her. She loved the idea and applied for the loan. She loves her home and it's in a good safe neighborhood so, she has no interest in selling her house and moving to use the equity. The reverse mortgage increased her income by over four hundred dollars a month and she has been delighted with the extra money.

Many people aren't aware of reverse mortgages. If you own your own home and have equity built up in it, you should consider a reverse mortgage to help generate extra income as you retire and make your life more comfortable.

You need to be 62 or older to obtain a reverse mortgage and how it works is that You obtain a loan based a percentage of the equity in your home. The lender will pay you monthly payments depending on the terms of the agreement usually until the day you die or until you move out of your home. In the end your home is sold to repay the loan--usually after you die, (grim huh?) If you decide to try out a reverse mortgage read the terms of the agreement carefully and ask any questions of the lender that you might have. It's something to think about anyway.