Explore BrainMass

Explore BrainMass

    $10,000 per year to rent a $100,000 house, loan of $80,000..

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    You currently pay $10,000 per year in rent to a landlord for a $100,000 house. You can qualify for a loan of $80,000 at 9% if you put $20,000 down but you would have to liquidate stock earning a 15% return. What is better? To rent or own?

    © BrainMass Inc. brainmass.com March 5, 2021, 12:11 am ad1c9bdddf

    Solution Preview

    We need to look at a few different things in this problem. The interest payments on the loan would be 80,000 x 9% = 7,200. The stock return is 20,000 x 15% = 3,000. We can immediately see that the cost of owning the home would equal 7200 + 3000 = 10,200 ...

    Solution Summary

    This solution discusses whether or not it would be better to rent or to own.