The total first-year cost when renting the home by the Bainter Family is d) 10,800.00.
What is the difference between renting and purchasing a home?
Renting a home offers a predictable expense with a known upfront cost, which enables planning. The repair costs are usually borne by the owner.
However, purchasing a home offers long-term stability and comfort in addition to reduced periodic payments.
Data and Calculations:
Renting Option:
Monthly rental payment = $900
First-year rental cost = $10,800 ($900 x 12)
Total payment for 30 years = $324,000 ($10,800 x 30)
Mortgage Option:
Monthly Pay: $586.82
House Price $150,000.00
Loan Amount $120,000.00
Down Payment $30,000.00
Total of 360 Mortgage Payments = $211,255.42 ($586.82 x 360)
Total costs of mortgage = $241,255.42
Total Interest $91,255.42
Question Completion:
The Bainter family is moving to a new town and needs a place to live. The Bainters are considering renting or purchasing a home and have found a suitable option for each option. • The home for sale is listed at $150,000.00. They have $30,000.00 for a down payment and are qualified for a fixed-rate 30-year mortgage with an annual interest rate of 4.2%. • The rental home is currently $900.00 per month, with rent expected to increase by approximately $75.00 every year.
Thus, the total first-year cost when renting the home by the Bainter Family is d) 10,800.00.
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