RE N T E RSU S B U Y H O M E. USE WO R SH E E T 5.2.

Amelia Flores is currently renting an apartment for $725 per month and paying $275 annually for renter’s insurance. She just found a small townhouse she can buy for $185,000. She has enough cash for a $10,000 down payment and

$4,000 in closing costs. Amelia estimated the following costs as a percentage of the home’s price: property taxes, 2.5 percent; homeowner’s insurance, 0.5 percent; and maintenance,0.7 percent. She is in the 25 percent tax bracket.

Using Worksheet 5.2, calculate the cost of each alternative and recommend the least costly option—rent or buy—for Amelia. lo1