2. Buying a Home Vs. Renting Group 1: Elizabeth Anderson, Natalie Christner, Val Denter, Jason Holmes, and Stephanie Stevens Project Part 3 Math 1050-040-F12

3. Introduction For Math 1050 we were required to complete a cost and benefit analysis of either buying or renting a home. We each had the opportunity to research a career and the accompanying wage. We then had to find a home that we would like to live in and figure out if we could afford the house based on our predicted future salaries. PersonCareerSalaryHouse PriceHouse Location StephanieElementary Teacher $49,931$199,000West Jordan, Utah JasonAstronomer$50,000$197,000Tucson, Arizona ElizabethElementary Teacher $31,200$120,000Sandy, Utah NatalieBiochemist$39,000$249,999Riverton, Utah ValElectrical Engineer $50,000$139,000Port Orford, Oregon

4. Purpose The purpose of this presentation is to explore the pros and cons of renting or buying a home as well as the pros and cons of a 15-year loan to a 30-year loan. We will also go through the math used to calculate each of these things based on the type of home each person could afford.

5. Renting vs. Buying There are advantages and disadvantages of buying a home or renting an apartment or house. Of course, this all depends on your lifestyle or what you can afford.

6. Disadvantages Of Buying Maintenance- If the furnace goes out or garbage disposal breaks ect. it's your responsibility. Property Tax- Taxes can increase and you must pay them. Depreciation- Your home can lose it's value, This depends upon the economy. Insurance- It is mandatory that you pay homeowners insurance through the duration of the loan. Advantages of Buying Tax Benefits- Home owners can use mortgage interest payments and property tax as a deduction. Equity- If your home maintains its value, you can build equity as you pay down your mortgage. Freedom To Alter Purpose And Appearance- As a homeowner you can knock down a wall or make aesthetic changes as you wish. Stable House Payment- If you choose a fixed rate mortgage, your principal and interest payment amount will never increase. Noise- Nobody jumping up and down on your ceiling. Make money- A real estate investment can be used to make more money. This is accomplished by purchasing a home and selling it when it's value is worth more than the amount is owed.

7. Advantages Of Renting No Maintenance- Most rentals will take care of any breakdowns or mishaps you my have. Amenities- Your place of rental may have swimming pools, basketball courts, playgrounds and exercise equipment all in the same complex for your enjoyment. Easy To Move- You don't have to worry about selling a house. If you have to relocate a lot because of your career or being pursued by the mob, you can do so after the lease is paid. Disadvantages Of Renting Rent- your rent can increase without notice making it less affordable. Pets- you may not be able to have that lovable Pit Bull or 200 pound Great Dane. Decor- You can't paint or remodel without permission. No Tax Benefits- renters can't deduct housing expenses. No Equity Cleaning Deposits- Most renters have to pay a cleaning deposit that they may not get back when they decide to move.

8. Mortgage Options 30 Year Pros 15 Year Pros Lower interest rate than 15 Year Pay less interest over the course of the loan Lower monthly payment than 15 Year leaving more disposable income With your lower payment, you have the ability to put more money toward principal each month, essentially paying it off sooner Build your equity faster than a 30 year

9. Mortgage Rates and Payment Info All group members were asked to calculate a monthly payment, based on their research. Both a 15 year fixed payment and a 30 year fixed payment were calculated. Results were then compared to an online Amortization Schedule to determine at what part of the loan timeline the homeowner was paying more in principal than interest.

10. Mortgage Rates and Payment Info Jason 30 Year Fixed Rate 15 Year Fixed Rate

11. Mortgage Rates and Payment Info Natalie 30 Year Fixed Rate 15 Year Fixed Rate

12. Mortgage Rates and Payment Info Val 30 Year Fixed Rate 15 Year Fixed Rate

13. Mortgage Rates and Payment Info Stephanie 30 Year Fixed Rate 15 Year Fixed Rate

14. Mortgage Rates and Payment Info Elizabeth 30 Year Fixed Rate 15 Year Fixed Rate

15. Amortization Schedule 36% to 38% of total money paid for each home was paid to interest during the term of the 30 year loan. It took 9 to 11 years to have more of the payment put toward principle than interest during the term of the 30 year loan. 17% to 19% of total money paid for each home was paid to interest during the term of the 15 year loan. More principle than interest was paid on the 1 st payment of the 15 year loan. Paying an additional $100 each month during the 15 year loan only resulted in a savings of approximately $4000 to $5000.

16. Conclusion Buying or renting a home is dependant upon your income and lifestyle. Buying a home gives you freedom to do what you will with it, but there are many costs associated with ownership. When buying a home, one must consider if a cheaper payment (30 year mortgage) is more important than paying less interest (15 year mortgage. Depending on the economy, renting is not always cheaper than buying a home.

17. Credits Jason - Kept us all coordinated and Mortgage Options Val – Buying vs. Renting Stephanie – Introduction Elizabeth – Purpose and Conclusion Natalie – Slide Animations/Transitions, Backgrounds, and Credits