Personal Finance- Renting vs. Owning

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Juanita is just starting out in her career and doesn’t have a lot of money saved up. She’s having trouble finding a roommate to help share the cost of a rental. She has family living in the area with extra housing space. What might be the best housing option for Juanita?

She should live with her relatives until she saves up or finds a roommate

Kumar would like to move into an apartment in the city. He can afford a little more than half of the monthly rent for the city apartment he likes, but doesn’t want to dip into his savings to cover the extra cost. What might be the best option for Kumar?

He should find a roomste to split the cost of rent wth in the new neighborhood

Alicia would like to settle down in the city where she currently lives and works. She has about $40,000 saved up, a well-paying job, and would like to put her money towards something that has the potential to grow over time.

She should purchase a home since it’s value can grow over time

What is a mortgage?

A type of loan used to finance the purchase of a home

What has the greatest impact on the amount of a mortgage?

The price of a home

Which of the following will affect the size of your monthly mortgage payment?
A) The size of your down payment
B) Length of mortgage
C) Purchase price of home
D) All of the above

D- all of the above

What is a car lease?

A long-term rental agreement for a car

What are some pros of leasing?

They have lower monthly payments, zero or low down pay,ends, and you have the option to lease to own

What are some cons of leading a car?

You have to pay for wear and tear, there is sometimes a max on mileage, you have to pay "rent" to the dealership every month, there are early termination fees, and you can’t sell the car in the end

What does it mean to buy a car?

You have full ownership over the vehicle

What are some pros of buying a car?

You do not have a max on your mileage and you can sell the car

Jim has $16,000 in savings, and he’s considering a $15,000 car. He’ll likely be driving quite a bit since he has a long commute to his downtown office from his house. In addition, Jim wants to keep a large savings safety net in his bank account. What’s the best option for Jim?

He should take out an auto loan since he wants to keep a large safety net

Shawna has $15,000 in the bank, and she wants to buy a $3,000 used car for her daughter, since there is no public transportation in their area. She doesn’t want to deal with additional bills each month and would like to pass down the car to her son after her daughter moves away. What’s the best option for Shawna?

She should buy the car upfront since she does not have to pay monthly bills

Louis lives in a major city and has about $5,000 in the bank. He’s been eyeing a $7,000 used car, which he would use mostly for commuting a mile to and from school. In addition, parking is hard to find in his neighborhood. What’s the best option for Louis?

He should stick with public transportation since he can save money and deal with less hassle. He won’t have to pay for the extra fees which will end up putting him in the hole

Carrie would like a car, but will probably only need it for a couple of years. After that, she plans on moving into the city and using public transportation. She has a short commute to work so she wouldn’t be putting too many miles on her vehicle. What’s the best option for Carrie?

She should lease a car since she doesn’t need the car for that long and she won’t be charged extra fees for going over the mileage limit since her commute isn’t far

Which of the following is NOT a cost typically associated with owning a car?
A) fuel
B) insurance
C) wear and tear fees
D) maintenance

C: wear and tear fees

Typically homes _______________ over time and cars _________________ over time

appreciate; depreciate

A ______________ is generally considered an appreciating asset because it may ___________ in value over time

house; increase

Depreciating assets:

Become less valuable over time

Select the statement that is NOT a component of standard housing lease
A) the monthly cost of rent
B) what repairs are the renter’s responsibility
C) type of pets allowed
D) purchasing homeowner’s insurance

D) purchasing homeowner’s insurance

Renting provides _________________ flexibility but can lead to _______________ costs in the long run

greater; higher

Jim is in the market for a car that will last for the next 10 years and has saved up some money for the purpose of a car. What’s the best transportation option for Jim?
A) renting a car daily
B) utilizing his saving as a down payment and buying the car using an auto loan
C) leasing a car
D) buying a car using an auto loan

B: utilizing his saving as a down lay,net and buying the car using an auto loan

Which combination of factors would result in the lowest monthly mortgage payment?

A large down payment, a longer term loan, and a low interest rate

John would like to move from the city into the suburbs and has been saving up a large down payment for a home. Which is the most cost effective way for John to buy a house in the suburbs?

Break his lease once he has bought the perfect home

Which best describes the benefits of renting a home?

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