Renting and Buying a Home

The largest number most people ever sign.

12 problems · about 22 minutes · TEKS M.M.5.B

What this lesson teaches

The student compares renting with buying and computes the costs attached to each.

Renting costs rent, a deposit and insurance; buying adds tax, insurance and maintenance.
Only buying builds equity, and it builds slowly at first.
Keep total housing costs under about 30% of net income.

Straightforward practice. Get the method working first.

5 problems

A 20% down payment on $200000. Amount in dollars?
Answer 40000
Why $40000.
What do people most often forget when costing a home purchase?
Answer Property tax, insurance and maintenance on top of the mortgage.
Why The costs beyond the mortgage payment.
A 10% down payment on $200000. Amount in dollars?
Answer 20000
Why 0.10 × 200000.
A 20% down payment on $300000. Amount in dollars?
Answer 60000
Why 0.20 × 300000.
Mortgage $1000, tax $250, insurance $80, maintenance $170. Total in dollars?
Answer 1500
Why Add them.

The same ideas with more to keep track of.

3 problems

Net income $5000 a month. What is 30% of it, in dollars?
Answer 1500
Why 0.30 × 5000.
Rent $1400 a month. Annual rent in dollars?
Answer 16800
Why 1400 × 12.
Which builds equity? 1 renting, 2 buying.
Answer 2
Why Ownership accumulates.

Mixed problems. Work out what kind of question it is before you start.

4 problems

Sort each cost by which arrangement it belongs to.
Answer Renting: Security deposit, Renter insurance · Buying: Property tax, Closing costs
Why Only an owner pays property tax.
A 5% down payment on $180000. Amount in dollars?
Answer 9000
Why 0.05 × 180000.
The Total: Mortgage $1200, tax $300, insurance $100, maintenance $200. Monthly total in dollars?
Answer 1800 dollars
Why $1800.
The Down Payment: A 20% down payment on a $250000 home. How much, in dollars?
Answer 50000 dollars
Why $50000.