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Renting Vs Homeownership Research Paper

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Homeownership is not only the American dream, it is a symbol of independence, providing comfort and security. However, many retirees and seniors will opt to sell their home, and are opting to rent. After decades of maintaining a home, they find comfort in allowing someone else to deal with the plumbers and landscaping. But is this a right choice for you?

Jean Chatzky, AARP’s financial ambassador and award-winning personal finance journalist, states that owning a comparable home costs less than renting even when you add in mortgage principal, interest, insurance and taxes. Anything factor to consider is rental rates do increase over time. When you buy a home with a fixed-rate mortgage, you know what your principle and interest payment will be over the entire loan. Therefore, simply from a budgeting standpoint, homeownership is the better choice. …show more content…

The longer your time horizon, the more owning is a good idea. It will take 3 to 5 years to recover costs from buying a home. closing costs and moving expenses can eliminate the benefits of moving if the timetable is shorter.

Additionally, there are tax advantages to homeownership. Property taxes are tax deductible, as is your interest if you finance. There is no tax benefit from renting. This can become extremely important if you have a lot of money in a retirement account, and mandatory minimum distributions push you into a higher tax bracket.

A final consideration is investment and hedging inflation. There are two choices. If you sell you home and then rent, you will need to invest the proceeds of your home sale.If you are a savvy investor, this may work for you. The other option is downsizing, investing part of the return from a home sale into a new

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