Question

Aleisha wants to buy a condominium. She has the choice of buying it now or renting it with the option to buy at the end of 4 years. If she rents now, she must pay a deposit of $1,500 and pay rent of $865 per month. If she buys, she would need closing costs and her mortgage payment would be $844 a month for 4 years. How much would her closing costs need to be in order for the cost to buy to be the same as the cost to rent

Answer 1

correct option is b. $2,508

Explanation:

given data

for rent deposit = $1,500

rent = $865 per month

time = 4 year

mortgage payment = $844

to find out

How much would her closing costs need to order for the cost to buy to same as cost to rent

solution

first we get here Total payment by monthly payment for 4 year rent is

Total payment = $865 × 4 year × 12 months

Total payment for rent = $41520

and so the total amount pay in rent is

total amount pay in rent = Amount deposited + Total payment ..............1

total amount pay in rent = $1500 + $41520

total amount pay in rent = $43020

and

now we get total payment by monthly payment for 4 year when buy

total payment = $844 × 4 year × 12 months

total payment for buy = $40512

and now we consider here closing costs for buying = x

so

total amount pay in buy = total payment + closing costs ..............2

total amount pay in buy = $40512 + x

so here cost to buy to be same as cost to rent so

$40512 + x = $43020

x = $2508

so here closing costs will be $2508

so correct option is b. $2,508

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