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8 December, 23:53

Given the information here, what is the annual cost of owning?

• Home value $ 300,000

• Annual mortgage payments $ 19,200

• Annual property taxes $ 4,800

• Annual homeowner's insurance $ 1,200

• Estimated maintenance and repairs 1 % of home value

• Growth in equity $ 3,000

• Tax savings (mortgage interest and property tax) $ 2,800

• Estimate annual appreciation 1.5 % of home value

a. $300,000b. $38,500c. $28,200d. $338,500e. $17,900

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  1. 9 December, 00:16
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    Answer: Option (e) is correct.

    Explanation:

    Estimate maintenance cost = Home value * Estimated maintenance and repairs 1 % of home value

    = $300,000 * 1%

    = $3,000

    Estimate Annual appreciation = Home value * Estimate annual appreciation 1.5 % of home value

    = $300,000 * 1.5%

    = $4,500

    Total costs:

    = mortgage payments + property taxes + homeowner's insurance + Estimate maintenance cost

    = $ 19,200 + $ 4,800 + $ 1,200 + $3,000

    = $28,200

    Benefits = Growth in equity + Tax savings + Estimate Annual appreciation

    = $ 3,000 + $ 2,800 + $4,500

    = $10,300

    Therefore,

    Annual cost of owning = Total costs - Benefits

    = $28,200 - $10,300

    = $17,900
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