Rent or Purchase a Home? Rental Option: Rent is 4000 per month for the first year. The monthly rental expense will increase by 200 for each subsequent year of renting. There is also a 4000 deposit payable when the lease is signed and refundable when the house is left in good condition. Purchase Option: The house price is 2500,000. A 500,000 down payment is made, so 2000,000 will be financed with a 30-year mortgage having a 5% annual interest rate. Additional contract tax of 3% of the house price are paid at the time of purchase. Property fee is expected to average 100 per month. The resale value of the home after five years is anticipated to be 3000,000. The commission paid to the realtor at the time of the sale is expected to be 2% of the selling price. If your personal interest rate is 8% per year (compounded monthly), is it more economical to rent or purchase this home? Examine the sensitivity of the decision to changes in the resale value of the home, the mortgage rate, and the length of ownership.