Rent or Buy Calculator : $24.95 USD

While purchasing a home is often the desired option, there are times (depending upon what the local real estate market is doing and how long you intend to live in a particular area) when renting may be a better choice. This rent or buy calculator helps you determine what may be best for you.

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Current Monthly Rent:  This is the amount of your current regular monthly rent payment.

Estimated Annual Rent Increase Percentage:  Over time, rents tend to rise. Estimate a percentage rate that you believe will reflect the average amount your annual rent will increase.

Years Before You Will Move:  Enter the number of years you expect to live in the place your currently rent.

Total You Will Spend on Rent:  Based on your current monthly rent, the percentage at which you expect your annual rent will increase over time and the length of time you expect to rent, this is the total amount of money you will expend on rent.

Cash Available for Down Payment:  Enter the amount of money you have available for a down payment on a home.

Estimated Annual Return if Invested:  Money has to be somewhere. If, during the time you rent, you invest the Down Payment money you currently have available for a down payment, it will earn interest and grow. Enter the annual percentage rate of return you expect your down payment money will earn if you invest it. If you will not invest the money you have for a down payment, enter 0 in this edit box. Your down payment cash will not grow.

Value of Investment:  If you choose to invest the money you have available for a down payment, at the estimated annual return you entered, this is what your down payment will grow to while invested.

Interest Rate of Home Loan:  This is the interest rate your lender will charge to loan you money for a mortgage. Mortgage interest rates vary among lenders for economic and personal reasons. Shop around. Your credit score (FICO) plays an important part in influencing the interest rate a lender will charge you. Other factors include the length of the mortgage you desire and whether you pay discount points up front.

Term of Home Loan in Years:  This is the length of your mortgage loan in years. Mortgages are usually paid off over 30 years, though some are for 15 years and, rarely, for 20 years.

Price of Home You Can Afford at Your Current Rent Payment:  Based on your monthly rent payment, the interest rate you entered and the term or length of mortgage you desire, this is the amount you would borrow to have a monthly mortgage payment similar to your monthly rent payment.

Personal Income Tax Rate %:  Interest paid on a home mortgage is deductible. Enter your total personal income tax rate, combining your federal and state tax rates. For example, if you are in the 28% federal tax bracket and pay 4% state income taxes, enter 32% for your personal income tax rate.

Annual Real Estate Tax Rate:  You will pay real estate or property taxes when you purchase a home. The amount will vary by location. You can call your local tax assessor's office or ask your real estate agent for the rate in your area. (It can vary, too, if you live in a city or in a county.)

Total of Interest Deductions:  This is the calculated amount of money you will "receive" in the form of tax deductions if you purchase a home.

Property Appreciation Rate:  While the current national market indicates otherwise, real estate tends to increase in value over time. If it is depreciating in value in your location, enter a negative percent here. Consult a real estate professional familiar with your area to determine the property appreciation/depreciation rate.

Appreciation of Property:  This is the amount of value your property will gain or lose based upon the property appreciation rate you enter.

Estimated Annual Home Maintenance Expenses:  Unlike renters, home owners are responsible for maintenance. Enter a reasonable estimate of what your annual home maintenance expenses may be.

Estimated Selling Costs as a % of House Value:  When you sell a home you have purchased, you will be required to pay the expenses associated with the sale of the home. For example, many real estate agents receive 6%. Throw in clean up and other fees, and a good estimate is between 8% and 10% if you use a real estate agent, 2% to 4% if you sell it yourself. If you expect to live in your house permanently, enter 0.

Effective Gain of Owning:  This is the effective gain you receive by purchasing a home with a payment similar to your monthly rent. It is the sum of your tax deductions, appreciation, accumulated equity and down payment (if you purchase down payment becomes equity) minus the expenses of your payments, the maintenance fees, property taxes and selling costs.

Actual Cost of Renting:  The cost of renting is the amount of money you will spend on rent minus the value of the return you receive on the cash you have for a down payment (if you invested it).

Effective Gain of Owning vs. Renting:  This is the Actual Cost of Renting minus the Effective Gain of Owning. It is an estimate based upon all the values you entered in the rent or buy calculator.