Answer:
(a) $498, (b) if cost is the only standard, then you should rent because the cost of buying is higher than the cost of renting.
Explanation:
From the question given, let solve the problem for both (a) and (b)
(A). Total rental and total buying cost
Rental Costs Buying cost annual rent = $7,380
Annual mortgage payments= $9,800
The Mortgage payments 145 Insurance 2,830
Insurance, maintenance, taxes = 39
The Interest lost on security deposit = 270
closing costs for Interest lost on down payment = -225
The Growth in equity= -1,700
The Annual appreciation -2,681
Tax savings for mortgage interest = -498
Then,
Tax savings for property taxes is:
$ 7,564 Total rental costs = $ 7,564
$ 7,796 Total buying costs = $ 7,796
The Interest lost on security deposit = $650 × 0.06 = $39
The Interest lost on down payment and closing cost = $4,500 × 0.06 = $270
The Tax savings for mortgage interest = $9,575 × 0.28 = $2,681
Property taxes from tax savings = $1,780 × 0.28 = $498
Let solve for b,
(B )If the cost is the only standard, then you should rent because the cost of buying is higher than the cost of renting.
