what are the pros and cons to renting to own a house or condo?

Question

We are renting now, should we do a rent to own? Or is it better to do a mortgage. The thing is we might be moving out of the state in four years.

Answer 1

It is a myth that renting is always worst off than buying.

Rent vs. Buy as Housing Market Continues to Slump

As housing market slump, it is easier to calculate "Rent vs. Buy" scenario. Because "appreciation" is no longer a factor.

Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it.

If interests portion of the mortgage payment is roughly equal to rent of equivalent property, then it is a decent buy.

For example, let's buy a $500,000 condo with 0% down and apply interests only loan (just like renting a place). Mortgage payment would be $3250/month. It is a bad buy, because you can enjoy same property for $2000/month.

Please note that I assume the tax benefits from home cancel out fees from home association and property tax. For more accurate calculation, consult with your CPA or accountant. But NOT your realtor, whom will say anything to get the deal to go through.

And again, if you like a particular property, then paying more may be reasonable. You are the only person who can decide how much more premium you are willing to pay.

http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm?postversion=2006090814
http://money.cnn.com/2006/09/05/real_estate/Ofheo_home_prices/index.htm?postversion=2006090514

Answer 2

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Answer 3

Better to buy. When you rent, the landlord can raise your rent, or sell the condo or house which forces you to move. When you buy, you can refinance every year, possibly lowering your monthly mortgage payments and giving you a nice return on your taxes, which you can use to upgrade the house or condo, or possibly take that vacation you've always wanted to take. Also, when you rent, you can't do any kind of improvements, because it's not yours to improve. When you buy, you can do anything you want to the house as long as it doesn't go beyond the rules of the housing authority.

Answer 4

In my opinion it is better to get a mortgage to own a house rather than to rent it.. First, paying for mortgage would means paying your own house, it is a form of saving as long as the interest is lesser than your rental, in most cases, it should. However, renting means a total expenditure with no residual value. Depending of where you are and what is the interest rate, and market conditions. Most area would see a rise in property value in 3 to 5 yrs time, this means u would be able to make some money in 4 yrs time when u decided to move to another state. Good luck

Answer 5

pros of renting: the landlord has the headache of fixing things around, you come and go as you please -- you are not responsible for the outside (exterior) appearance of your building etc. Cons of renting -- you pay "rent" and nothing belong to you, you always have the feeling that is not "your home sweet home, but rented".
Second part of your question-- if you do plan to move out of the state within that short period of 4 yrs. --just continue to rent. The real estate market is unpredictable -- the year you want to move out might not be the right year to sell. Hope it helps.

Answer 6

According to Rock FinPros & Cons of Buying a Home
Ask a renter why they don't buy, and they may have one of any number of reasons:

Not enough money for a down payment
Job may require them to move from location to location
They're unsure where they want to live
They believe they can make more money in investments
They don't want to be tied down
They think they can't afford it
Don't think the benefits of home ownership outweigh the benefits of renting


Ask a homebuyers why they bought, they might tell you:

It's part of the American Dream
They've saved up enough money for a down payment
They've decided where they want to live and want to settle down
They see it as an enforced savings plan
They're tired of "throwing" money away on a rented apartment
They don't want to deal with landlords
They want a place to call their own ancial:

Answer 7

rent to own is generally a scam; I lost money this way, fixed up the house, paid the mortgage for the guy, lost my dpayment and all the rent credits, the only one making money on this is the rent to own person.

owner financing is the way to go with bad credit, then you really do own the house. but you need a downpayment for that. of course I did for my rent to own..too much of one. should have gone to an owner finance program.

Answer 8

Rent to own is usually a scam and you land up accumulating very little capital. Do a mortgage and then sell when you leave..

Answer 9

Rent-To-Own Homes - http://RentToOwnHome.uzaev.com/?HjTj