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Which is bettert to rent or to bur? The decision of whether to rent or buy housing is a personal decison that is based on

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Which is bettert to rent or to bur? The decision of whether to rent or buy housing is a personal decison that is based on both your lifestyle and your finances. While most financial experts argue that the financial aspect of the decision is important, it is also important not to base your rent-ar-buy decision selely on the numbers. Your personal needs and housing market conditions are important. However, it is still necessary to perform the finencial analysis. Tim and his wife are trying to decide whether to rent or to purchase a new townhouse. Mter isoking for several months, therve nacrowed their choice down to one particular house, and the bulder is willing to lease or seli-depending upon the preference of the buyek. To perform a rent-or-buy analyss, Tims and his wife have collected the following informations - If they rent, the builder will require monthiy rental payments of 11,000 and a security depout equal to two months of rent. - Since they want to be protected against the possble loss of their possessions, they will purchase a renters' policy of $200 every six months, while a more comprehensive homeowners' policy will cost 0.5% of the homes value per yean. - Money used to fund the house's secunty deposit could otherwise be invested to earn 2% per year after caxes. Funds expended for a home's down payment and dosing costs alsp incur an opportunity cost. - If the house is purchased, it will cost $247,000 and will require a 20% down poyment. The loan will carry an interest nate of 696, a term of 30 years, and monthiy payments of $1,185. The closing costs associated with the houses mortgage will be $3,500. - The property taxes and the maintenance and repair expenses on the house are estimated to be 3\% and 1% of the housers totat price, respectively. - Your ord nary income is taxed at the rate of 28%, and you? be wilng to itemite your tax deductions in the cvent that you purchase your new home. - Financial publications report that home values are expected to increase by 3% this year due to infiation. - Hinancial pubications report that home values are expocted to increase by 3 th this year due to infiation. Complete a rentoribuy analysis warkshoct to determine the botal cost of renting and the fotal cost of purchating Tim and his wint syospective house. To complefe the warkshoet, enter the appropriate values in their correcponcing blanks and round each valie to the nearest whelt daNan Based on this analysis, Tim 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

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