Questions On Buying A Home Or Renting

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Abdulhakeem Usman Prof. Shick ECON 208 CT Essay 1. Explain the problem. Clearly summarize the main issues and relate why there is a problem. Over the years, people have had to make the choice of either buying a home or renting one. Your choice of living may depend on your lifestyle and financial ability. Buying a home or renting is a complex decision most families and individuals have faced in their lifetime. There are so many factors to be considered – location, access to amenities and proximity to essential places. But the greatest factor to be considered is usually the financial implication. Questions like “Can I afford to stay here”, “Will it be worth more when I plan to sell it”, and “How would I feel later in the future” are in …show more content…

We start by examining the costs and gains of owning and renting. In terms of owning a house, the key profit from this is the equity the owner gets from the house when he sells it. From that equity, the cost of maintenance and property taxes as well as other homeowner expenses such as insurance from it. According to Emre Ergungor and Saeed Zaman, the federal tax code allows some homeowners to subtract their mortgage interest and property tax payments from their taxable income, which can lead to tax savings. The tax benefits also reduces the net cost of owning a home. On the rental side, the main con is the aggregate rent payment. To see profits, consider a renter’s ability to save money and invest. Because people are eager to buy bigger houses that possess adequate number of essentials, the total payments for buying a house (mortgage, maintenance etc.) usually cost more than payment of renting. This means that if a family chooses to remain renters, they could be saving the difference between the rent and the money they would have spent as homeowners, and that savings could be invested and earn income over time. Savings value you acquire is the advantage of renting, and the difference between it and the total rent expense is the net cost of renting (Ergungor and Zaman). Rental prices dropped as supply increased in some markets and at the end

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