Question: Everyone in your family attends the same college. In order to save on housing costs for yourself and our siblings your parents are considering purchasing a house for you near campus. Dorm costs are $2,000 per semester and are expected to remain so for the foreseeable future.
Three bedroom houses in Philadelphia sell for $150,000. You are currently a junior and thus plan to be in school for another 3 semesters.
Your younger sister starts here next year, and your younger brother will most likely follow her a year later.
Will purchasing a house save your parents any money if the annualized interest rate is 5% compounded monthly? Assume your siblings will each spend 4 years at that college and that housing values in Philadelphia are projected to increase by 2% per year.
2 Semesters Per Year.