Based on the following data, would you recommend buying or renting?

RentalCosts Buying Costs
Annual rent	$	7,780	Annual mortgage payments	$	10,600	(9,775 is interest)
Insurance	$	185	Property taxes	$	1,940
Security deposit	$	1,050	Down payment/closing costs	$	5,300
			Growth in equity	$	825
			Insurance/maintenance	$	1,450
			Estimated annual appreciation	$	2,100

Assume an after-tax savings interest rate of 6 percent and a tax rate of 28 percent. Assume this individual has other tax deductions that exceed the standard deduction amount.

a.	Calculate total rental cost and total buying cost. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.)

Rental cost	$
Buying cost	$

2)

Based on Exhibit 7-7, what would be the monthly mortgage payments for each of the following situations? (Round your answers to 2 decimal places.)

a.	A $141,000, 15-year loan at 5.5 percent.	$
b.	A $216,000, 30-year loan at 6.0 percent.	$
c.	A $167,000, 20-year loan at 5.5 percent.	$

3)

If an adjustable-rate 25-year mortgage for $126,000 starts at 6.5 percent and increases to 7.0 percent, what is the increase in the monthly payment amount? Use Exhibit 7-7. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Monthly payment increase

$

4)

Kelly and Tim Jarowski plan to refinance their mortgage to obtain a lower interest rate. They will reduce their mortgage payments by $57 a month. Their closing costs for refinancing will be $1,730. How long will it take them to cover the cost of refinancing? (Round your answer to the nearest whole number.)

Number of months

months