Benefits of Purchasing a New House - Economics Essay Example
Whether to buy a house or not is a life changing decision - Benefits of Purchasing a New House introduction. The principle that played a big part of purchasing a house was the cost of something is what you give up to get it. I had to compare the costs and benefits of either buying a house or renting a bigger apartment now that living in a studio is no longer an option because of the baby. In a house we will have more space, and it will be closer to schools, but I will have to cut back on spending because I will have to adjust my budget to be able to afford the house.
With owning a home you have to pay property taxes and home owner association and with renting an apartment you do not have those extra costs. But then you have to think about the rent you are paying every month for something that will never be yours so there are definitely tradeoffs and benefits that must be carefully considered. Other factors like the current market prices for houses are needs to be considered. You do not want to buy a house if you know that they are going to go down in the next year. It might be better to wait.
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I think that one of the most important principles to consider when buying a house is rational people think at the margin. Because you have to think about the marginal benefits that one will gain by purchasing a house. The marginal cost is what one is going to put out in down payment, closing costs, moving costs etc. But the marginal benefit in the long run after the house has been paid off and the value of the house has increased after all those years outweighs the marginal cost. So it would be a good decision to purchase a house.