Assignment: Rent vs Buy Assignment
Do some research to compare renting vs buying a house. (Compare 2 years with 7 years of living in the same home - one as a renter, one as an owner). Using any of the many sites available to search for homes for sale. Find a home that you feel you would like to live in once you are settled into your ideal career.
Give a brief description of the house:
What is the listing price?
How much are the property taxes?
Now find a comparable home for rent. You want to find similar specifications so that you can compare apples to apples. (Zillow does list possible rent cost on some homes, you may be able use the exact same one!)
How much is the monthly rent?
Using the Rent vs Buy Calculator of Freddie Mac's site compare renting vs buying a house using the figures above.
Other factors you'll need to know.
Monthly renter's insurance: Assume $15 a month
Yearly rent increase: Assume 3%
Home appreciation: Assume 5%
Your savings interest rate: Find this out from your bank (Usually pretty low)
Your state and federal tax rate: Determine this using your salary projections (sec.1)
Loan amount: Assume that you put 20% down
Interest rate: Find out the current 30 year interest rate (bankrate.com is easy)
Use the origination and other closing charges they fill in.
Yearly property insurance: $500
Selling costs: Assume 6%
Calculate results:
Will owning saving you money? If so how much?
What is the difference in payment of renting vs buying (at 2 years vs. 7 years)?
What are your estimated tax savings?
How much equity will you build in the period (2 years vs. 7 years)?
What else should you be considering for this "life" decision?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.