Lingsch Realty
3232 Mission Street
San Francisco, CA 94110
(415) 648-1516
Fax: (415) 648-3377

Home Buyers:

Q & A Should I Rent or Buy? Mortgage Calculator

What are the benefits of renting over buying?

The main advantage of buying over renting is the build up of financial equity in a home over time.

Since most homes increase in value over time, the owner's equity increases. For example, if you buy a home for $l80,000 and its market value increases to $200,000 in three years, the difference of $20,000 is an increase in your owner's equity.

Another way in which buyers increase their equity is through paying off their debt on the house.

Think of your home as a savings account. Each month, you make a mortgage payment. Generally, part of that monthly payment goes toward paying down the debt. Therefore, as you pay down the debt, you gain more equity in your home. Therefore each month, though you are paying a bank or other lender, you are essentially putting money in your own pocket.

See the chart below for more pros and cons of renting and buying:

RENTING		BUYING
Pro	Con	Pro	Con
No responsibility for repairs, maintenance, and other aspects of home ownership that can be both costly and time-consuming.	Restrictions on having pets	Pets allowed	Responsible for cost of repairs
Rental complexes may provide many amenities you would like, but couldn't afford with a home, such as a swimming pool or tennis court.	Restrictions on decorating	Control over your property	Semi-permanent living situation
Doesn't require a large outlay of cash	Lack of control over property	More personal freedom	Requires an outlay of cash
More mobility or flexibility.	Does not build equity over time	Freedom to decorate, landscape and maintain to your tastes
	No tax benefits	Interest and property tax deductions.
		Builds equity
		Security and independence
		Pride of ownership

What are the tax benefits of owning a home?

As a home owner, the interest you pay on your mortgage payment is tax-deductible. Therefore, the amount you are currently paying in rent maybe be equivalent to a higher monthly mortgage cost, when you figure in the tax benefits.

Please review the following chart for examples:

Current Rent Payment	Equivalent Estimated Mortgage Payment (after deducting mortgage interest payments)	Estimated Housing Price*
$1,500	$2,307.69	$500,000
$1,600	$2,461.54	$510,000
$1,700	$2,615.23	$562,000
$1,800	$2,769.08	$575,000
$1,900	$2,923.08	$612,000
$2,000	$3,076.92	$637,500
$2,500	$3,846.15	$812,500
$3,000	$4,615.38	$930,000
$3,500	$5,384.62	$1,080,000

How can I afford a home?

Some suggestions:

If you already have a roommate, or don’t mind living with a roommate, this is a great way to have someone contribute to you monthly mortgage payment.
Ask friends or relatives for assistance. You may not want to ask them to just “Give” you the money, but rather ask them to form a partnership with you or ask them for a loan. There are companies out there such as Virgin Money that can legitimize the loan process between friends and relatives to make it more like a business deal, with security for the mortgagee.
You may have been investing in an IRA over the last couple years. Some of this money can be used for a down payment on a house without any tax implications. Ask your accountant for more information.

How do I start looking for a home?

The first step to buying a home is to talk to a mortgage broker. A mortgage broker will ask you some questions about your assets, debt and income and will then tell you what type of loan you qualify for.
Visit Sunday Open Houses to get an idea of styles you like, neighborhoods and what you can get for your money. Open Houses are open to the public.
Once you know how much you can afford and what type of house you are interested in talk to a Realtor, who can help you find the home of your dreams for the best price and the best terms.