Question

Compare the Mariginal benefits and the marginal costs associated with buying a home

Answer 1

Marginal benefits are the benefits derived from consuming an additional unit of gopd whereas marginal cost are the costs associated while paying for an additional unit of good for rational individual it is important to compare the marginal benefits and marginal cost then purchasing any good. here given to discuss the marginal benefits and costs associated with buying a home.

Following are the marginal costs associated with buying a home

For decision like buying a home and individual should be well prepared for the huge costs associated with it. If the individual decides to buy a house the payment needs to be done through EMI that is monthly payments for the complete payment at the time of buying it most individuals purchases on EMI or amortization basis so so it becomes important to analyse the marginal cost associated with the payments along with the monthly rent which would be in case an individual is Living out on rent before making a purchase of his own house. These would add as an additional cost to rent and hence should be carefully analyzed.

Second cost is the cost of maintanence. For any asset to be purchased like land , car or home , maintanence and upkeep is required. This would be from mowing the lawn to repairing broken taps and repainting walls. All of these require additional costs and for an individual it is necessary to equate these marginal costs to the marginal benefits he derive from owning a home.

Another cost associated would be if one decides to defer the decision of buying home, renting a home would be the substitute. For this the monthly payments till one decides to buy a home and buys it, the restrictions imposed by the landlord and other additional factors would be the additional costs if one decides to defer the purchase.

Marginal benefits would be the benefits associated when one owns the house. These could be

The freedom to live the way one wants . This is one of the most important marginal benefit one can derive from owning the house, he can renovate , paint and change it according to one's own choice without being considering the restrictions imposed by Landlord.

Also when purchased , government is offering various tax shields and other benefits to encourage individuals to buy home which could be another added benefit of purchasing it. This is along with one being saved from paying rents.

These were the marginal costs and marginal benefits associated with buying a home.

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