1. Math 1050 Term Project Brandon Kidd Shirene Mohajer Shojaee Chuck Bergstrom

2. Results Regardless of our chosen career path, we each were able to find a home in the current market that would be affordable. -30 year mortgages, though they have a higher interest rate, are more affordable or at least offer more home for the payment. -15 year mortgages have a higher monthly payment, but save the borrower tens of thousands over the life of the loan when compared to a 30 year mortgage. -According to our findings, a 15 year mortgage will save the borrower, on average versus a 30 year mortgage, 23% over the life of the loan. -According to our findings, adding $100 each month to a 15 year mortgage will save the borrower an additional 2%, on average, over the life of the loan.

3. Conclusions Buying Pros We all agreed that the below are pros for home ownership. In addition to these we also felt that in most cases, monthly rent is currently as much as a mortgage payment. 1. Pride of ownership -Offers the freedom to choose colors, fixtures, etc to suite your personal tastes -Gives you a sense of stability and security -Makes an investment in your future 2. Appreciation -Regardless of market swings over the years real estate has consistently appreciated -Investment as a hedge against inflation 3. Mortgage Interest Deductions -Superb tax shelter -Tax rates favor homeowners -Interest, being the largest portion of the payment, can be tax deductible

4. Conclusions Continued 4. Property Tax Deduction -Property taxes paid for a first home and a vacation home are fully deductible 5. Capital Gain Exclusion -If you qualify, you can exclude certain amounts of profit when selling you house from capital gains -This exclusion is available every two years. 6. Preferential Tax Treatment -If you receive more profit than is allowed to exclude, the remaining profit receives preferential tax treatment 7. Mortgage Reduction Builds Equity -A portion of each monthly payment goes toward principal which increases your equity 8. Equity Loans -Interest from loans versus the equity in home can be tax deductible and use for anything -Better rates and tax breaks that are not offered is using a credit card *The above list was taken from http://homebuying.about.com/od/buyingahome/bb/buyhome.htm.http://homebuying.about.com/od/buyingahome/bb/buyhome.htm

5. Conclusions Continued Renting Pros 1. No maintenance or upkeep -Many people don’t have the time, knowledge, or desire to do what it takes to take care of a home. 2. No surprise costs -If something breaks the landlord is financially responsible for repairing or replacing. 3. Creditworthiness -Generally one does not have to have good credit to qualify for a rental. 4. Low initial investment -Unlike the usual 20% needed by mortgage lenders, landlords generally only require first and last month’s rent and a security deposit.

6. Insight When deciding a home shopping budget many factors need to be taken into consideration. The biggest factor may be what you can afford, but this can also lead to trouble down the line. It may be enticing to buy the largest home you qualify for, but you have to consider possible loss of income, market fluctuations, crime, local education, future development, vicinity to work, neighbors, etc. Many of these factors are not considered until it is too late. Though we all agreed that home ownership is the better decision financially, it isn’t always feasible. If you have the credit, solid income, desire, responsibility, and maturity required to own a home then this is the best option. However, many people are lacking any one or many of these traits we feel is needed for home ownership and thus renting would be a better option for these individuals. Depending upon where you are in your life and other factors such as market condition, each person will most likely alternate between these two living arrangements at different times during their lives.

7. Credits Brandon KiddInsights Shirene Mohajer ShojaeeConclusions Chuck BergstromResults