Answer to Question #65914 in Microeconomics for Jonny Deng

Question

You find a nice condo and town home to purchase and are willing to put 10% of the purchase price down. You have a good job and strong income with limited expenses. You don't even own a car, a decision you made at the margin in order to save for the down payment. Your monthly mortgage payment will be $1200 which is more than your rent of $900. You will be charged an interest rate of 6% on a fifteen year mortgage. All things being equal in terms of a sound financial decision your _____________ on the home should exceed your cost of borrowing.

Answer 1

If your monthly mortgage payment will be $1200 which is more than your rent of $900 and you will be charged an interest rate of 6% on a fifteen year mortgage, then things being equal in terms of a sound financial decision your payment on the home should exceed your cost of borrowing.