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Rent or Purchase? The Bainter family is moving to a new town and needs a place to live. The Bainters have narrowed their search to two houses they think will work for their family. The first house is a rental. The monthly rent is listed at $1, 190, with the expectation that it will increase 1.7% each year. The second house is available for purchase. The cost to purchase the home is $195,000, but the Bainters plan to make a $40,000 down payment. They have been approved for a fixed-rate, 30-year mortgage with a 4.2% annual interest rate for the balance of the cost. The monthly payment would be $757.98. The Bainters realize they will have approximately the same costs for electricity and natural gas whether they rent or purchase. The only additional expenses the Bainters have if they rent instead of purchase are an annual $75 cleaning fee an annual $450 pet fee an estimated monthly $17 fee for renters' insurance The estimated expenses the Bainters have if they purchase instead of rent are $200 per year for HOA fees $1,750 per year for property taxes $1,950 per year for home maintenance $75 per month for water and sewer services $10 per month for trash and recycling services $65 per month for internet $110 per month for homeowners' insurance The Bainters want to compare the costs of renting a home to the costs of owning a home before considering the other factors. Keep in mind that the Bainters anticipate that they will live in the area for a minimum of 15 years. 1. How does the cost of renting for a year compare to the cost of owning for a year? 2. Does one option seem better than the other based on the cost estimates alone? Why? Your two answers should include the estimated annual cost of owning a home (refer to the calculations that you wrote down previously for the project) the estimated cost for renting after 1 year, 5 years, 10 years, and 15 years a comparison for each of the 4 time frames between the annual cost of renting versus owning your explanation of which option (renting or owning) seems better based only on the cost estimates, and why Rent or Purchase? The Bainter family is moving to a new town and needs a place to live. The Bainters have narrowed their search to two houses they think will work for their family. The first house is a rental. The monthly rent is listed at $1, 190, with the expectation that it will increase 1.7% each year. The second house is available for purchase. The cost to purchase the home is $195,000, but the Bainters plan to make a $40,000 down payment. They have been approved for a fixed-rate, 30-year mortgage with a 4.2% annual interest rate for the balance of the cost. The monthly payment would be $757.98. The Bainters realize they will have approximately the same costs for electricity and natural gas whether they rent or purchase. The only additional expenses the Bainters have if they rent instead of purchase are an annual $75 cleaning fee an annual $450 pet fee an estimated monthly $17 fee for renters' insurance The estimated expenses the Bainters have if they purchase instead of rent are $200 per year for HOA fees $1,750 per year for property taxes $1,950 per year for home maintenance $75 per month for water and sewer services $10 per month for trash and recycling services $65 per month for internet $110 per month for homeowners' insurance The Bainters want to compare the costs of renting a home to the costs of owning a home before considering the other factors. Keep in mind that the Bainters anticipate that they will live in the area for a minimum of 15 years. 1. How does the cost of renting for a year compare to the cost of owning for a year? 2. Does one option seem better than the other based on the cost estimates alone? Why? Your two answers should include the estimated annual cost of owning a home (refer to the calculations that you wrote down previously for the project) the estimated cost for renting after 1 year, 5 years, 10 years, and 15 years a comparison for each of the 4 time frames between the annual cost of renting versus owning your explanation of which option (renting or owning) seems better based only on the cost estimates, and why

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