Home Rent vs. Buy Calculator
Wondering whether it’s cheaper for you to rent or buy? By factoring in both upfront and recurring costs of renting and buying, our handy calculator will help you determine how many years it will take before the cost of buying a house equals the cost of renting. If you plan on staying in a home past this breakeven point it may make sense to buy, but if you plan on moving before then, renting could be a better option financially.
What are the Costs of Renting?
Our Rent vs. Buy Calculator uses monthly rent payments, and certain estimated information on after-tax investment return, income tax rate, expected inflation, home appreciation, and future sales commission (as further detailed in the definitions below) to provide a comprehensive estimate of the cost of renting.
What is the Cost of Buying a Home?
We use your inputs to estimate mortgage costs and home expenses as well as down payment amount and closing costs to calculate the cost of buying home. The mortgage costs and home expenses include purchase price, interest rate, loan term (in years), monthly PMI, property tax rate, home insurance costs, and association and maintenance fees. Down payment and closing costs are calculated including cash on hand, loan origination, points paid, and any other closing costs or fees.
How Does the Rent vs. Buy Calculator Work?
This calculator determines your breakeven point by examining how long it would take to create enough equity in your home to exceed the value of investing your cash on hand as a renter, based on the information you’ve provided and otherwise as described below. If your rent payment is less than your net house payment, the tool adds that monthly savings to your investment. If your house payment is less than your rent payment, the tool subtracts that amount from your investment.
Other Factors to Consider When Deciding Whether to Rent or Buy
Beyond the financial considerations mentioned above, you’ll likely want to consider what impact the decision whether to rent or buy will have on your preferred lifestyle. Renting provides more flexibility as you can always decide to move at the end of a lease. However, if you rent your landlord can always decide to raise your rent if you want to renew at the end of your lease. If you decide to purchase a home your monthly mortgage payment will remain the same year over year (unless you refinance), and you’ll also be building equity in your home. If you value putting your own mark on your living space, buying could also be a better option as you’ll have more freedom to renovate and design your home to your specific taste. Conversely, one of the benefits of renting is that you don’t have to spend your own money on unexpected repairs or necessary renovations.
The calculator tool provided is for informational purposes only and does not reflect any specific mortgage or home equity line of credit offered by Leader Bank or any specific terms that may be available for such products. For information on available Leader Bank products and services, please contact a Leader Bank loan officer directly. Examples of monthly payment amounts shown in calculators does not include taxes, insurance or any condominium or HOA fees applicable; as such your total monthly housing payment would be higher. For any adjustable or variable rate loan examples provided, interest rate may increase after consummation and your fully indexed rate, annual percentage rate and monthly principal and interest rates may be higher.
