Question: The cost of rent for apartments in the area where you would like to live are $1,200 a month. Assume you could purchase a home in the same area and the cost of your monthly mortgage would be $1,500 a month. If you are in the 30% tax bracket and assume all the cost of your mortgage is deductible (all interest, no principal), how much would the difference in cost be JUST FOR YOUR MONTHLY PAYMENT between renting and buying? Hint: you have to look at the after tax cost of your mortgage payment and compare to renting.
A. you are better off by $150 per month by buying
B. you are better off by $300 a month renting
C. $0--there is no difference
D. you are better off by $250 per month by buying
E. you are better off by $150 per month renting