Question

Annual rent $ 7,380

Answer 1

Answer:

Part A:

Rent = $7380

Mortgage payments = $9800

Insurance = $145

Taxes, insurance, maintenance = $1780+1050$ = $2830

Loss of Interest on security deposit = (650*6%) = $39

Interest lost on down payment and closing cost = (4,500*6%) = $270

Growth in equity = $225

Annual appreciation = $1700

Tax savings for mortgage interest = (9,575*28%) = $2,681

Tax savings for property taxes = (1,780*28%) = $498

Total rental cost = $7,380+145+39=7,564$ dollars

Total buying costs = $9,800+2,830+270-225-1,700-2,681-498=7,796$ dollars

Part B:

You should consider rent because the cost of renting is less than the cost of buying.