What is a Rent vs. Buy Calculator?
A Rent vs. Purchase Calculator is a tool for helping you decide whether it makes more sense to rent or buy real estate. Though your decision will of course be driven by your individual needs, this calculator can help you run the figures to see if buying a home makes sense for your household.
Rent vs Buy Calculator
To use the calculator, input any of the following figures and the others will adjust accordingly. These are the categories into which you can input data:
- Current monthly rent
- Estimated annual rent increase
- Number of years before you will move
- Amount available for a down payment
- Estimated annual return on investment
- Interest rate on your home loan
- Length of your home loan
- Personal income tax rate
- Annual real estate tax rate
- Estimated property appreciation rate
- Estimated home maintenance expense
- Estimated selling costs as percent of home value
These are the categories that will be calculated as a result of the data you input and the data that adjusts automatically as a result of what you input. These adjust automatically and cannot be changed by the person using the calculator:
- Total you will spend on rent
- Value of your investment
- Price of home you can afford at your current rent payment
- Total of interest tax deductions
- Property appreciation
- Effective gain of owning
- Actual cost of renting
- Effective gain of owning vs. renting
How Do I Use the Information?
The Rent vs. Purchase calculator will show you three major things: effective gain of owning, actual cost of renting, and ultimately, the difference between owning and renting. These figures should be able to help you decide whether it makes sense for you to own or rent your home.
Buying a new home has plenty of costs you may not even have considered. Before you make a decision to buy a home of your own, remember that you'll need to pay major costs including the following:
- Loan points. Buyers must pay these up front in exchange for a competitive interest rate. Each point equals 1 percent of the loan value.
- Appraisal fees. Buyers are also required to pay these to prove to the lender that a home has a certain value. Appraisal fees are required for loan issuance.
- Loan origination fee. This applies to anyone who gets a new mortgage loan.
- Mortgage insurance application fee. This is only applicable if you're putting down less than 20 percent on the home.
- Inspection fees. You'll need to have a home inspection done to ensure there are no hidden problems with your home.
- Mortgage-broker fees. Buyers are solely responsible for these.
- The insurance premium for the mortgage, if this applies.
- Homeowner's insurance premiums, which are required of the borrower.
- Other fees such as title insurance, early termination fees, fees for any title work, real estate agency fees, and attorney's fees.