Renting vs. Owning: Building Equity In Your Future (NAPSA)—For many Americans, owning a homeis the corner- stone of their financial wealth. In fact, building equity in a home, combined with tax advantages offered by both federal and state covernments, has driven homeownership to record levels in recent years. However, millions of renters continue to have misconceptions about the home-buying process, often delaying a home purchase by saying “it’s too com- plicated.” Buying a homeis not as complicated as it may seem. With a thorough understanding of the process, owning a home can be a very real possibility for many renters. One of the key steps in determining whether you should be a homeowner versus a renter is understanding what happens to the money you pay each month for rent or mortgage. For example, let’s consider a renter with a monthly payment of $600. Over five years, that person will have spent $36,000 on rent. In 10 years, that numberrises to $72,000. That would be $72,000 without building any equity, or ownership, in return. If the same monthly payment were applied to a mortgage, a por- tion of each month’s payment would go toward paying down the principal (the price at which you purchased the home less a down payment), which would allow you to build ownership in the property. In addition, the interest that you pay each month, as well as any property taxes, may be deductible on your federal income taxes—a tax advantage not available to many renters (consult a tax advisor or the Internal Revenue Service regarding the deductibility of interest). “What renters often don't realize is that in the long term, they can't afford to not buy a home, particularly as rental rates increase in many parts of the country,” says Jim Ferriter, executive vice president for GMAC Mortgage. Market conditions are very favorable for first-time homebuyers. If you have been thinking about making the move to owning a home versus renting, now is the time to start seriously looking at homes. On the flip side, probably the ereatest advantage of renting is the flexibility it offers in terms of moving. Also, the ease of knowing you are not responsible for many repairs that might arise or for the upkeep of a yard is appealing to many people of all ages. Renting is a good step towards homeown- @ process. In addition, there are many online resources, such as smartedgebygmac.com, that offer information about financing your first home. eCheck your credit. Be aware that your credit history may affect the interest rate, and the type of mortgage program for which you may qualify. You may want to work on improving your credit before purchasing a home. e Find an experienced real estate professional. A real estate agent can be invaluable in helping you through the process of buying yourfirst home. Get preapproved for a mort- gage. It is one of the best ways to determine how large of a monthly mortgage payment you can afford and will give you an indication of your price range as you shop for homes. You will want a preapproval letter when you bid on a home, as some sellers may not accept offers from buyers who have not demonstrated someability to finance the purchase. “Owning a home is a great ership because it helps a person opportunity to begin building equity and it can offer numerous can possibly improve a person’s credit score when payments are “No one should be intimidated by the process involved with buying a understand the discipline of meeting a monthly obligation, and it made on time. If you decide to move forward on the process of buying a home, consider these tips from GMAC Mortgage: e Attend a first-time buyer workshop to learn about the home-buying and financing other advantages,” added Ferriter. home. Using these tips, you can be in your new homesooner than you think.” For more information and use- ful online tools on renting versus owning, please go to http:// www.gmacmortgage.com or call (800) 888-GMAC.
