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

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