Question

sasha has just gotten a new job in a nearby city. after comparison shopping, she found that renting a nice two - bedroom apartment would cost around $800 per month. her utilities would cost about $150 per month. sasha has enough money saved for a down payment, and she found that she can buy a three - bedroom house or condo with a mortgage payment of $1,000 per month, including taxes and homeowners insurance. her utilities would cost about $200 per month. what is the advantage of buying the house over renting the apartment? the extra expenses in the mortgage payment cover all maintenance and repairs. sashas monthly expenses would be less for buying than for renting. sashas down payment will likely be less if she decided to buy. sasha will own the house and earn equity as its value increases.

Explanation:

To determine the advantage of buying over renting, we analyze each option:

• Option 1: The extra expenses in mortgage payment for maintenance/repairs is a cost, not an advantage.
• Option 2: Rent is $800 + $150 (utilities) = $950. Buying costs: $1000 (mortgage) + $200 (utilities, taxes, insurance) = $1200. So buying is more expensive monthly, eliminating this.
• Option 3: A down payment is a cost to buy, not an advantage of buying over renting.
• Option 4: When buying a home, as its value increases, the owner (Sasha) gains equity. Renting does not build equity, so this is a key advantage of buying.

Answer:

D. Sasha will own the house and earn equity as its value increases.