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LET’S PRACTICE
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The Big Question At some point in your life, you will consider the BIG question: Should you buy or rent your home? Deciding whether to buy or rent is one of the biggest financial decisions you will ever make. You need to think carefully about how renting or buying will effect your income and wealth building. For this exercise, we will use Realtor.com’s “Rent or Buy Calculator” and michaelblujay.com to determine whether buying or renting is the better option under various conditions.
1. Go ahead! Pick a city or town you want to live in. Go to realtor.com and find the average home price and the average rent . _ ______________________________________________________________________________ _ ______________________________________________________________________________ 2. On realtor.com open the advanced options tab . Input the average home price into the “Desired Home Price” box and click “Calculate.” If you bought an average-priced home in your desired ZIP code, how much would you pay in property tax? _ ______________________________________________________________________________ 3. You found an apartment near your college campus. The landlord is a nice old guy who says “Just sign this paper promising to pay rent on the first of the month. We can agree on the details later.” What key lease terms should be included in that “paper” before you sign it? _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ 4. Under the above conditions, what happens if you have a 5.5% mortgage interest rate ? Explain how this shows the importance of having a good credit score. _ ______________________________________________________________________________ _ ______________________________________________________________________________ 5. Explain how appreciation builds wealth for homeowners. _ ______________________________________________________________________________ _ ______________________________________________________________________________ PRODUCT PREVIEW
Chapter 9 | Home is Where the Mortgage or Lease Is 170
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