Assume your after-tax savings return

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The monthly rental is $850 per month with $1000 deposit; renter’s insurance is $200 a year.

The purchase option is a $150,000 condo, financed with $30,000 down payment and an $120,000 6% 30-year mortgage; loan closing costs is $4,500.

Property taxes is 2% of home price; homeowner’s insurance and maintenance is 0.5% and 0.8% of home price, respectively.

You expect that the value of the condo will grow 2% per year. Assume your after-tax savings return is 4% and income tax rate is 25%

Rent or buy?

Reference no: EM131838517

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