Question
How much do the Reddings need to save on a monthly basis beginning at the end of this month toward a down payment in order
How much do the Reddings need to save on a monthly basis beginning at the end of this month toward a down payment in order to purchase their future home for $300,000? Assume they invest at an interest rate equal to the expected return on the S&P 500 Index (9%) and pay all associated taxes out of their current budget.
Their plans:
Purchase a home for $300,000 in eight years with a 20% down payment. Housing costs are expected to increase with inflation. They intend to keep their current home as a rental property.
Be free of mortgage indebtedness by the time Benjamin is 55 years old.
They expect inflation to average 4% annually.
Mortgage rates are 5.5% for a 15-year fixed and 6.0% for a 30-year fixed. Any refinancing will incur 3% of the mortgage amount as a closing cost.
Mortgage rates are 5.5% for a 15-year fixed and 6.0% for a 30-year fixed. Any refinancing will incur 3% of the mortgage amount as a closing cost.
there may be extra information
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