Download Review Notes 16 - 19 Name: #1) April wants to buy a home and

Review Notes 16 - 19
Name: ______________________
#1) April wants to buy a home and move out of her apartment. She estimates her first-year
expenses to be mortgage interest, $9,557; lost interest of $753; property taxes, $2,264;
insurance, $548; depreciation at $3,102; maintenance and repairs, $1,532; and utilities, $1,872.
She expects to save $2,463 in taxes. (a) Find the total expenses and (b) her net cost of
home ownership for the first year. Notes 16
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#2) The Montoyas want to buy a condominium. They estimate that their expenses in the
first year will be: mortgage interest, $4,964; real estate taxes, $1,795; insurance, $386;
association fees, $840; depreciation, $1,781; maintenance, $300; utilities, $1,200; and lost
income on cash invested, $525. They will also save $1,400 in income taxes because of
increased tax deductions. (a) Find the total expenses and (b) her net cost of home
ownership for the first year. Notes 16
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#3) Jill’s monthly rent on a house she is leasing is $984. The security deposit is one month’s
rent. Jill pays $37 a month for trash pick-up. Her other annual costs include $105 for
insurance and $2,132 for utilities. What was the cost of renting the apartment for the one
year? Notes 17
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#4) Timothy Lassauer leased an apartment. The monthly rent is $900. The security deposit
was two months worth of rent. Timothy’s costs of renting were: insurance $110 a year;
utilities, $80 a month; garage, $50 a month. What was the cost of renting the apartment for
the one year? Notes 17
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#5) Cory is moving to another city. The cost of a one-bedroom apartment within a onehour drive of the downtown area where he will work is $1,150 per month. The cost of
utilites is expected to average $200 a month. Renters insurance would cost $175 a year. He
can find a home in good condition that has the following annual expenses: property taxes,
$3,240; mortgage interest, $9,520; depreciation, $2,800; maintenance and repairs, $2,600;
insurance, $890; and lost interest on investment, $350. Estimated income tax savings of
home ownership are $4,000. (a) What is the cost of buying the house for the 1st year? (b)
What is the cost of renting the house for the 1st year? (c) What would have been cheaper to
do, rent or buy, and by how much? Notes 18
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Review Notes 16 - 19
Name: ______________________
#6) Candace estimates her loan interest, taxes, insurance, and maintenance to be $15,250 on
a house she just bought. She estimates her house would depreciate $3,485 a year. Candace
would lose $715 interest on the cash invested in her home, but would save $3,204 on taxes.
She could have rented the house for $1,023 a month, paid insurance of $156, utilities of
$1,843, and not had any maintenance expenses except for the cost of routine cleaning. She
also would have paid a security deposit of $1,500. (a) What is the cost of buying the house
for the 1st year? (b) What is the cost of renting the house for the 1st year? (c) What would
have been cheaper to do, rent or buy, and by how much? Notes 18
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Review
#7) Jose will be able to purchase a townhouse by making a 2.5% down payment on its
$78,590 purchase price. He estimates his closing costs to be 3% of the purchase price. (a)
What is the amount of the down payment? (b) What is the amount of the closing costs? (c)
What amount will Jose have to borrow for the mortgage to purchase the home? (d) What is
the total cash Jose will have to pay for the down payment and the closing costs? Notes 13
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#8) Tomas and Kelly bought a new home in the anticipation of a new baby. They bought a
home for $85,000 with a $5,000 down payment. The loan is for 20 years at 8%. (a) Find the
number of months, (b) their monthly payments, (c) the total amount paid, and (d) the total
amount he will pay in interest over the 20 - year loan period. Notes 14 (Chart)
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