• Evaluate the pros and cons of renting and homeownership
• Calculate the monthly payment and interest expenses of a mortgage
• Interpret and understand an amortization schedule

Real Estate Journey: Navigating Renting and Buying in the Housing Market

 

Welcome to your journey into the world of real estate! To guide you through this journey, we’ll follow the story of Alex, a recent graduate who just landed his dream job. Eager to find a place of his own, he’s ready to navigate through the challenging terrain of homeownership. With Alex’s perspective, we can explore and understand the benefits and drawbacks of renting and homeownership, as well as the intricate details of home buying, like monthly mortgage payments, interest expenses, and the all-important amortization schedule. Let’s jump right in! Let’s start by comparing renting and buying.

Similarly, there are certain benefits to buying a home compared to renting.

When Alex decides to buy a house, he must consider additional costs, including closing costs.

Let’s say Alex has chosen a lovely house listed for [latex]$175,000[/latex]. He’s saved a [latex]20\%[/latex] down payment. His bank has offered him a [latex]30[/latex]-year mortgage at [latex]4.5\%[/latex] interest.

Now that we’ve figured out the down payment, let’s move on to determine the amount you’ll need to borrow from the bank. This is also known as the mortgage amount.