Question

Jen and walter are a young, married couple with a 5-year-old son. they are looking for a house, with a yard, in a nice neighborhood in a good school district where they can plan to live until their child is grown. which of the following is an advantage of renting a home rather than buying it?

a. they will get an annual income tax deduction for a portion of their rent.

b. they can be certain to stay in the home until their son finishes school.

c. there are far more houses of this type available for rent than for purchase.

d. they won't have to put down a large down payment if they rent a house.

Answer 1

The main advantage of renting a home for Jen and Walter is the absence of a large down payment. Renting offers financial flexibility and reduced initial costs compared to buying, but does not build equity or offer long-term housing security. In contrast, buying a home can provide tax benefits, equity building, and housing stability but comes with a higher upfront cost and maintenance responsibilities.

Step-by-step explanation:

Jen and Walter, a young married couple with a son, are considering housing options and are weighing the advantages and disadvantages of renting vs. buying a home.

The advantage of renting a home for Jen and Walter is that they won't have to put down a large down payment if they rent a house.

This financial flexibility can be especially beneficial for a young family that might be prioritizing other financial commitments or that might not have substantial savings for a down payment on a home.

Renting a home usually entails a lower initial financial commitment than buying. There is no large down payment required, and renters do not personally need to handle maintenance issues, which can lead to unpredictable costs.

Conversely, the disadvantages of renting include not building equity, typically not benefiting from housing tax deductions, and lacking long-term security in residency, as rental agreements are subject to change and often have fixed terms.

Homeownership, on the other hand, allows individuals to build equity in their property and possibly benefit from capital gains in the future.

Homeowners can also enjoy annual income tax deductions for mortgage interest and create a stable long-term housing situation.

However, buying a home requires a significant initial financial investment in the form of a down payment, and homeowners must manage all maintenance responsibilities and associated costs.