Rent or Buy a House You are staying in Raleigh! With a post-graduation career in the Triangle, you need a place to live. A move-in ready townhouse is $300,000 using a 20-year mortgage and putting 10% as a cash down payment (i.e., you only need to finance 90% of the purchase price). The current interest rate you have available is a 4.25% APR compounded monthly. "Closing costs," that is, transaction costs associated with purchasing the house, are 2% of the purchase price. Suppose, you expect home values in Raleigh to continue to grow at 2.5% per year. Finally, if you were to sell the home, you would realize 5% in fees (costs of a realtor and associated transaction costs). Alternatively, you can rent an apartment for $1,900 per month. There is a $3,000 security deposit, due at the time you move in. Assume that the cost of the rental increases 15% every five years. Mortgage and rental payments are made at the end of every month. Assuming you will live in this location for 10 years (i.e., you sell the house or stop renting at that time), find the implied cost of the rental. Do you rent or do you buy? (You can find NPV at the rental rate or the implied interest cost of the lease. For both of these, you need some cash flows!) Pay attention to formatting and do not hardcode numbers into your formulas. Home value time 0 oan amount nterest rate Loan term ayment Closing costs time 0 Eent time 0 security deposit Home value year 10

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A house that you are interested in has the following facts listed online: Price = $214,000 APR = 1.15% Down Payment must be 9.5% Loan time frame is 35 years The Loan you must take out is 193670 What is the Monthly price you must pay on this house.

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You want to buy a house that costs $170,000. You have $17,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $153,000. However, the realtor persuades the seller to take a $153,000 mortgage (called no more than $17,000 per year given a seller take-back mortgage) at a rate of 10%, provided the loan is paid off in full in 3 years. You expect to inherit $170,000 in 3 years, but right now all you have is $17,000, and you can afford to make payments your salary. (The loan would call for monthly payments, but assume end-of-year annual payments to simplify things.) a. If the loan was amortized over 3 years, how large would each annual payment be? Do not round Intermediate calculations. Round your answer to the nearest cent. $ Could you afford those payments? -Select- b. If the loan was amortized over 30 years, what would each payment be? Do not round Intermediate calculations. Round your answer to the nearest cent. $ Could you afford those…

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When purchasing a $100,000 house, a borrower is comparing two loan alternatives. The first loan is an 80% loan at 4% with monthly payments of $591.75 for 15 years. The second loan is 90% loan at 5% with monthly payments of $526.13 over 25 years. What is the incremental cost of borrowing the extra money assuming the loan will be held for the full term? O 6.50% O 13.21% O 7.20% O 13.70%