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Looking for help on the following assignment. I have worked the problem myself. Please show work when answering, so that I can compare my work
Looking for help on the following assignment.
I have worked the problem myself.
Please show work when answering, so that I can compare my work to it, to see if I have missed something.
Thanks.
Exercise The exercise consists of two parts. Please answer each part completely and explain your rationale. Part 1 1. Celia Hernandez is currently renting an apartment for $725 per month and paying $275 annually for renter's insurance. She just found a small townhouse she can buy for $185,000. She has enough cash for a $10,000 down payment and $4,000 in closing costs. Celia estimated the following costs as a percentage of the home's price: property taxes, 2.5%; homeowner's insurance, 0.5%; and maintenance, 0.7%. She is in the 25% tax bracket. Use 3% as the \"Annual Appreciation of the Home.\" On line 12, Assume Celia's "security deposit" is equal to one month's rent of $725. Also assume a 4% rate on her savings and a 6% mortgage interest rate. Using the rent or buy analysis calculate the cost of renting and buying and recommend the least costly option for Celia. Use the information provided in Part 1 to complete the Lesson 6 Template - Rent or Buy . Part 2 1. Heather Zhang purchased a condominium 4 years ago for $200,000, paying $1,250 per month on her $162,000, 8%, 25-year mortgage. The current loan balance is $152,401. Recently, interest rates dropped sharply, causing Heather to consider refinancing her condo at the prevailing rate of 6%. She expects to remain in the condo for at least four more years and has found a lender that will make a 6%, 21-year, $152,401 loan, requiring monthly payments of $1,065. Although there is no prepayment penalty on her current mortgage, Heather will have to pay $1,500 in closing costs on the new mortgage. She is in the 15% tax bracket. Based on this information, use the mortgage refinancing analysis to determine whether she should refinance her mortgage under the specified terms. Use the information provided in Part 2 to complete the Lesson 6 Template - Mortgage RefinancingStep by Step Solution
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