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Buying vs. Renting

Black news from Pasadena - buying vs rentingIt's an age-old question that people may be asking themselves: "Should I buy or rent?"

While there is no simple answer because everyone's financial situation and goals are different, consider these advantages and disadvantages between buying and renting:


Some advantages of buying may include: Low interest rates. Interest rates are hovering at historic lows, a clear advantage when purchasing a home. Buyer's market. Today's economy presents opportunities to buy properties at reduced prices, as housing inventories may be higher amid foreclosures. Build equity. Buying provides the opportunity to grow your equity.

Some disadvantages of buying may include: Potential depreciation. In today's economic climate, it is possible to purchase a home that will lose value before it appreciates. Therefore, it is important to assess how long you intend to live in the home and if you are willing and able to make the payments until it increases in value. Tight credit market. Unfortunately, the credit crunch affects everyone, even individuals with high credit scores. Therefore, obtaining a loan in this climate may be more challenging than in years past. Home ownership costs. Owning a home means additional out-of-pocket costs for you, including: closing costs; property taxes; mortgage principal and interest; ongoing maintenance and repair costs; and insurance payments.


Some advantages of renting may include: No depreciation worries. As a renter, you do not have to worry about your home losing value in this economy. Pick up and go. You will not have to bear the burden of selling a home in a tough market if you decide to move. Save money. Renters can save on expenses of home ownership including property taxes, mortgage interest and maintenance and repair costs. Find bargains. Renters can take the time to search for profitable property deals as home values plummet.

The disadvantages of renting may include: No equity. If you rent, you do not have the ability to build equity or realize appreciation on your investment down the road. Foreclosures. Today, it is not uncommon for renters to learn that the property they're renting is in the process of foreclosure. Therefore, it is especially important for renters to conduct research before signing a lease agreement. Don't hesitate to check the county records office to determine if the property owner is behind on property tax payments. Prior to renting, be wary of any irregular activity at the property, including notices that could signal eviction.


Before making the decision to buy or rent, it is important to take the time to research each option carefully. If you are considering buying, take the time to study the numbers and make sure that you can make the property payments until the economy rebounds. If you are planning to rent, take the time to research the status of the property before signing a lease agreement.

The foregoing article is intended to provide general information about buying and renting and is not considered financial or tax advice from Union Bank. Please consult your financial or tax advisor.

[Frank Robinson is the Diverse Banking Manager for Union Bank, N.A., responsible for administering a Special Purpose Credit Program to assist minority-owned businesses in securing business financing on a bank wide basis. Union Bank, N.A. is a full-service commercial bank providing an array of financial services to individuals, small businesses, middle-market companies and major corporations. Union Bank is a proud member of the Mitsubishi UFJ Financial Group (MUFG, NYSE:MTU), one of the world's largest financial organizations. Visit www.unionbank.com for more information.]


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