2000 words REFLECTION PAPER OVERVIEW based on worksheets and assignment that already have been done & letter of last instruction

FIN 218 Rent vs Buy Assignment

Abdulrahman Al Baalharith

Do some research to compare renting vs buying a house. (Compare 2 years with 7 years of living in the same home – one as a renter, one as an owner). Using any of the many sites available (rmls.com, http://www.zillow.com/ , etc) to search for homes for sale. Find a home that you feel you would like to live in once you are settled into your ideal career.

Give a brief description of the house:

Stunning four bedroom, two and one-half bathroom with 3,120 square feet of living space in the heart of Gresham. Beautiful wood-like laminate floors throughout the main floor. Gorgeous chefs kitchen with stainless steel appliances flows into the main living area with a cozy wood burning fireplace. Upstairs you'll find all bedrooms. Master suite with a suite bathroom, soaking tub and spacious walk-in closet. Large bonus room just past the laundry room. Fully fenced backyard with majestic trees.

One great feature about this home is that it's located on the end of a cul-de-sac in a very quiet residential neighborhood. As you walk in, the home is flooded with natural light from the large windows surrounding the main living area. Another great feature is how expansive the kitchen and main living area are, they flow together seamlessly with an open concept feel, and it is a great space for entertaining.

What is the listing price?

The listing price is $511,900, and it is $2,623 monthly.

How much are the property taxes?

The property tax is $6,615 for 2018 year.

Now find a comparable home for rent. You want to find similar specifications so that you can compare apples to apples. (Zillow does list possible rent cost on some homes, you may be able use the exact same one!)

How much is the monthly rent?

The rent monthly is $1549.

Using the Rent vs Buy Calculator of Freddie Mac’s site compare renting vs buying a house using the figures above.

http://calculators.freddiemac.com/response/lf-freddiemac/calc/home10

Other factors you’ll need to know.

Renting

Monthly rent: From your research

Monthly renter’s insurance: Assume $15 a month

Yearly rent increase: Assume 3%

Home Purchase

Purchase price: From your research

Down payment: 20%

Homeowners’ insurance: $600

Property taxes: From your research

Maintenance: $1500

Loan Info

Terms: 30 Year

Interest rate: Find out the current 30-year interest rate (bankrate.com is easy)

Loan origination: $1500

Discount points: 0%

Other settlement services: $3,000

Other Assumptions

Appreciation: Assume 5%

Years in home: 7 years

Selling costs: Assume 6%

Your state and federal tax rate: 35%

Your savings interest rate: Find this out from your bank (Usually pretty low)

Calculate results:

You will save $185,456 by buying instead of renting over the 7 years.

Will owning save you money? If so, how much?

Yes, $185,456.

What is the difference in payment of renting vs buying?

The difference is the taxes and some of the maintenance, and so on.

What else should you be considering for this “life” decision?

I consider that owning is the best for me and my family.