2-7-12

After you graduate, do you plan on renting a home or buying your home?

Why?

How much should I spend?

Basic Rules1.Purchase price/annual

income = 2.0 or less2.Monthly pmt = 33% or less

of monthly pay check.

Pros/Cons of Owning

What would be the pros/cons of owning your own home?

Talk to a neighbor and jot down any that you can think of.

Pros/Cons of OwningPros• Build equity — your wealth will increase as you gain more home equity• Tax advantages – get to subtract from your overall bill• Stabilize your payments — monthly payments are relatively steady if your loan has a fixed

interest rate, while your landlord can increase the rent• Have a secure place for your family to live — a home provides a permanent place where your

family can live and grow, and you can decorate or expand a house the way you like to create your dream home

• Gain a sense of community — homeowners often are more involved in the well-being of their communities; many homeowners work together for better schools and less crime

Cons• Maintenance costs — it takes work and money to keep a home in good condition• Ties up your cash — selling the house may not be possible during the first few years of

ownership; moving is more difficult and complicated and you may not have as much flexibility in choosing a new job location

• Can fluctuate in value — there is no guarantee that your home will increase in value; it could decrease in value

• Obligates your finances — when you buy a home, you are obligated to a set monthly payment

Pros/Cons of Renting

What would be the pros/cons of renting your own home?

Talk to a neighbor and jot down any that you can think of.

Pros/Cons of RentingPros• Mobility – easy to get up and move somewhere else• Cost – typically it is less expensive then owning a home• No maintenance costs

Cons• No equity – all past payments are lost• Can’t personalize as easy• Privacy• Pets – some apartments don’t allow pets• Is there a yard available for use?

How much should I spend?

Basic Rules1.Purchase price/annual

income = 2.0 or less2.Monthly pmt = 33% or less

of monthly pay check.

How much should I spend?

Basic Rules1. Purchase price/annual income = 2.0 or less

2. Monthly pmt = 33% or less of monthly pay check.

Pretend you have finished school and are ready to live on your own. Decide

if you would like to own/rent. Go online and find a home/apt in the Sioux City area and see what you

might be able to afford. How do prices in Sioux City compare to LA?