If they rent, the builder will require monthly rental payments of $$2,000$ and a security deposit equal to two months of rent.

Since they want to be protected against the possible loss of their possessions, they will purchase a renters' policy of $$200$ every six

months, while a more comprehensive homeowners' policy will cost $0\mathrm{.}5\%$ of the home's value per year.

Money used to fund the house's security deposit could otherwise be invested to earn $4\%$ per year after taxes. Funds expended for a

home's down payment and closing costs also incur an opportunity cost.

If the house is purchased, it will cost $$300,000$ and will require a $20\%$ down payment. The loan will carry an interest rate of $6\%,$ a

term of $30$ years, and monthly payments of $$1,439.$ The closing costs associated with the house's mortgage will be $$3,500.$

The property taxes and the maintenance and repair expenses on the house are estimated to be $3\%$ and $2\%$ of the house's total price,

respectively.

Your ordinary income is taxed at the rate of $28\%,$ and you'll be willing to itemize your tax deductions in the event that you purchase

your new home.

Financial publications report that home values are expected to increase by $3\%$ this year due to inflation.

Complete a rent$-$or$-$buy analysis worksheet to determine the total cost of renting and the total cost of purchasing Lorenzo and his wife's prospective

house. To complete the worksheet, enter the appropriate values in their corresponding blanks and round each value to the nearest whole dollar.

Total Annual Cost of Purchasing:

Based on this analysis, Lorenzo and his wife should:

Purchase the home, as the cost of purchasing is greater than the cost of renting.

Purchase the home, as the total cost of purchasing is less than the cost of renting.

Rent the home, as its total cost is less than the total cost of purchasing.