Based on the theory, which is better: to rent or to buy?The decision of whether to rent or buy your housing is a personal decision that is based on both your lifestyle and your finances.While the financial aspect of the decision is important, it is important not to base your rent$-$or$-$buy decision solely on the numbers. Your personal needs and housing market conditions are important.The freedom to decide what, when, and what color youre going to paint cant be quantified, but it is very relevant to the rent$-$or$-$buy discussion.What are the theoretical and lifestyle aspects of the rent$-$versus$-$buy decision?Among the personal and lifestyle factors that are relevant to this decision are:Your desire forprivacy Your desire to fix up your living space andmake it your own The personalsatisfaction that results from homeownershipRead each of the following situations and determine whether it makes more financial sense to rent or to buy the home.KateKate has three cats and two dogs and would not want to be separated from them if a housing option would not permit pets.Based solely on these factors and assuming that everything else remained constant, should Kate rent or purchase?RentPurchaseEileenTo avoid losing her job entirely, Eileen just accepted a downgraded position. It pays $25\%$ less and provides fewer benefits, including a substantially lower end$-$of$-$year bonus. Her current bills consume $93\%$ of her monthly income, and she has no savings set aside at this time.Based solely on these factors and assuming that everything else remained constant, should Eileen rent or purchase?RentPurchaseSeveral financial or economic factors are relevant to the rent$-$or$-$buy decision. From the following list, identify the financial or economic factors that should be considered when performing this analysis. Check all that apply.A desire for privacy and control over a part of your lifeCurrent and expected future housing pricesThe nature of the housing unit, such as whether it is a condominium or a standalone house$\backslash$table$[[$RENT$-$OR$-$BUY ANALYSIS FOR HOUSING Amount$],[$COST OF RENTING$],[$Security deposit$],[$Annual rental cost$],[$Renter$\text{'}$s insurance$],[$Opportunity cost on security deposit$],[$Total Annual Cost of Renting:$]]$

RENT$-$OR$-$BUY ANALYSIS FOR HOUSING Amount

COST OF BUYING

$($$$)$

Monthly mortgage payment

Annual mortgage payments

Property taxes

Homeowner's insurance

Maintenance expenses

Opportunity cost of down payment and closing costs

Total costs

Less

Reduction of Ioan principal

Tax savings on mortgage interest deduction

Tax saving on property tax deduction

Total deductions

Annual after$-$tax cost of homeownership

Estimated annual appreciation in home value

Total Annual Cost of Purchasing:

Based on this analysis, Jake and his wife should:

Purchase the home, as the cost of purchasing is greater than the cost of renting.

Rent the home, as its total cost is less than the total cost of purchasing.

Purchase the home, as the total cost of purchasing is less than the cost of renting.