Economic decisions

People have to make tough economic decisions, everyday. These decisions will affect your economic status. One controversy that many people have today is whether to buy or rent a home. There are many advantages and disadvantages to either side, but it is important to review the factors before you make your final decision. It will be the most important decision you will make. Many individuals have a hard time choosing which is better for them. It depends on a number of things. There are many questions to be answered before you make your decision. Today the economy is in a recession and many individuals need to cut back to survive until it is over; the recent economic state may affect your choice. Your job status will also play an important role. If there are any job promotions or relocations then you may want to consider renting over buying a house. The duration of how long you want to live there is another factor you have to consider. You need to review all of the factors stated and look over the options and which will work for you at the moment.

You need to evaluate the advantages and disadvantages of renting before making any decisions. While renting a home there are no maintenance fees, and all appliances are there for you. As a result a renter needs much less money up front. Since money is always an important issue, renters also benefit from not having to pay any closing costs, points, or fees. A renter has fewer worries than a buyer since very little money is at risk. A foreclosure for a home owner can result in many thousands of dollars lost, but a renter simply has to worry about his next apartment or home. Anyone who rents can be much more flexible in terms of moving. A new job for example might be just a minor change compared to a home owner who would first have to sell the home, hope for a profit and then search for a new home to buy. One other advantage a renter has is that they won't have to pay any property taxes. As a renter, you will have a landlord who is in control of the home, unlike buyers where as you are in control. They can raise the monthly price, which you will have no control over There will be some fees such as a security deposit, but not as many fees as a home owner. “A security deposit gives a landlord some protection for their property if a tenant fails to uphold their end of a lease agreement. It is normally used to pay for damages that occur on a rental property, such as broken windows and doors, carpet cleaning, or other types of damage.” A downside to renting is that there is no home equity, which means that you have no ownership being built up for the place you live. Therefore a homeowner after 20 years may own most of his house where as a renter after 20 years still owns no part of what he is renting. As a result a renter builds up no credit except for the fact that he has paid his lease on time. As an addition to that renters have the risk of eviction if the monthly rent.[1]

On the other hand buying a home would be an investment as well as a responsibility. A home owner may have a sense of community. Homeowners have a financial obligation to make their homes look good so that their neighborhood appears prosperous. People are in essence working together to increase property value as well as quality of life. Renters on the other hand don't have no financial stake and have no responsibilities for maintenance. The first thing most new home buyers enjoy is the freedom from the landlord. The homeowner will have his own rules, decorates according to their own taste and has no one but himself to answer to. As well as having your own freedom, you still have the responsibly of maintenance. If something breaks in the house it will be your job to repair it, and anything that happens on your property is your obligation to take care of it. A home owner does not have the peace of mind of calling a landlord and having the work taken care of free of charge. Of course he has to pay property taxes, but those taxes allow for a tax deduction from the IRS. First time home owners often benefit from loan or tax programs offered either by the government or financial institutions. An advantage that a home owner will have over a renter is that they can build their equity in their home. The longer a home owner pays on his mortgage the greater the percentage of the property that is his. "Each time you make a monthly mortgage payment, you build equity in your home, which can be converted to cash by refinancing or selling your property."[2] If you cannot pay your mortgage then there is a risk of a loss of equity, and it could ruin your credit score. As for buying the home there are down payments and closing costs. Many individuals have the risk of foreclosure. [3]

With foreclosure in mind a new law has been passed in New York for foreclosure cases. Through tough times there have been many foreclosures across America. Governor Patterson has passed a new legislation law which will help in preventing more foreclosures in this crisis. "According to Gov. Paterson, this effort is about keeping New Yorkers in their homes and protecting them during this economic crisis. He said the laws passed in New York have stood as a national model for foreclosure mitigation, and the legislation will expand the reforms achieved in last year's law in several ways to protect homeowners, tenants, and neighborhoods."(Dunn). The numbers of foreclosures have decreased in the past year and Governor Patterson feels that this will help in preventing even more. It will help home-owners that are in need of assistance. "In response to the mortgage crisis, New York officials have offered funding and administration of grant programs for counseling and legal services, outreach and loan modification events that bring homeowners face-to-face with lender and servicers, and refinancing and mortgage programs such as the introduction of the 40-year fixed rate mortgage through the state of New York Mortgage Agency. Additionally, there have been neighborhood stabilization initiatives to return foreclosed properties to productive use, and enforcement actions have been created through the formation of the mortgage fraud unit within the banking department."(Dunn). Many people who have been unable to pay their mortgage due to job loss, have been given the chance to renegotiate the terms of their loans so that the people can remain in their homes and the banks could avoid addictional foreclosures. Many loans were adjustable rate which means that the interest rates would vary. When rates were low, people had few problems but as rates rose many found themselves unable to continue making regular payments. These are just some of the factors that a potential home buyer should consider before making a commitment.

In my opinion and my economic state I would rent a home. Even though you won't be able to build an home equity it is a better choice. For one your job affects your choice, if your job requires you to move from place to place then you should rent. If you don't know how long you will be in each place then it is good that you rent a home. With buyers you could be stuck with the home for many years and sometimes try and sell the house and in some cases they won't sell. The market right now isn't looking to good, there is not much activity, there is a very little amount of homes that are being purchased or sold. A renter doesn't need to take care of any maintenance work or fees, it is all taken care of by your landlord, whereas a owner would have to take care of it themselves. When you begin to rent the home, there are no closing fees or down payments. The only payment that is needed is a security deposit, which is paid just like a down payment, but it is given back when you leave the home or they take it to use it for repairs. This is only given back if there are no damages to the home, landlords will walk through and check everything out before handing it back. There are also no property taxes which in the long run will make it cheaper to rent a home. When renting there is no capital at risk, with buying there is a huge amount of capital at risk. You could make a down payment when buying and then you could lose the home if you are unable to pay. That down payment is lost its not given back and it is usually a large sum of money. There is also no risk of having your house foreclosed, with renting there still is a risk of eviction, but if you pay your monthly rent on time and respect the landlord then there is no problem. You could still even have a sense of community when you rent. Renting is the way to go, for many individuals it has worked out well and in today's economy everybody seems to be renting because in the long run is cheaper. Buying is also good too but that is if you would and are able to pay all those fees including owning a home.

Today in the economy many people are renting homes because of the recession, people are trying to cut back and others can't afford to buy a home at the moment. In the next couple of years the economy will slowly rise out of this recession. The decision to rent or own is a very big one to make, you have to think long and hard. It is best to look over everything such as your current job, economic state, duration of your stay in that area and always the trends of the market. But the biggest factor is if your able to afford each option. Some that really want to buy a home may not be able to afford it, so they have to rent first until they are able to pay. This is why people say that owning a home is the American dream, but it is a dream that often takes many years to realize.

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