HOW I USED MATH TO FIND THE PERFECT HOME
I don't know how people survive, let alone thrive, without math...
- •First, I did several simulations in ExcelI found average house prices, mortgage rates and rental prices. Plugged in expenses. I ran a few different scenarios. In the end, I found the odds of losing less money on owning a home than rwnting were greater than the other way around (losing less money on renting). I even found that the financial situations of renting an apartment versus buying a home were pretty even but accounting for the fact that my happiness will be greater in a home, the buying came out on top.
- •When looking, I applied the optimal stopping algorithmThe first 10 houses we looked at, we didn't even consider buying. But we got a threshold. The next house we saw that was better than that threshold, we bought. Optimal stopping is ideal for home hunting... and it worked out exceptionally well in my case.
- •Negotiating loansWe got a parent loan, but there were a lot of suggestions and negotiations thrown around... lucku for me and math, we were able to find a deal that both gave our lenders a better return than they were getting from their bank and also saved us a lot of money. I don't want to go into crazy detail here because it is a little personal.
- •Pay off loan or saveAlso with math and some simulations I'm able to predict where I should put my money in order to come out with the most when I retire. Will a 1.5% return on investment be better in 40 years or should I pay down the loan? It's a bit of guessing but math does help.
- •I love math.