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Housing: Rent vs. Buy Calculator Print
Friday, 26th May 2006 (by J.D.)This article is about Choices, House and Home, Tools
Should you buy or rent? That’s a question we each face at some point.
It doesn’t always make sense to buy. Depending on your location, your marital status, your income level, how long you intend to live in a particular location, and a handful of other variables, renting may actually make more sense than purchasing a home.
Here’s a web-based rent vs. buy calculator that can help you play with different scenarios.
I used the calculator to look back at the first home purchase my wife and I made. In 1993 we were paying $550 in rent. We took out a $112,000 mortgage on our first homel, paying $5000 down. We lived there exactly ten years. According to the calculator, we saved almost $67,000 by buying!
We paid approximately $108,000 to live in our home for ten years, and would have paid $83,000 if we had continued to rent. The calculator indicates we should have had $92,000 equity in our home (which is almost exactly correct, actually), giving us a net savings of $67,000.
If home prices are rising, the increase in equity is nearly the same as the magic of compound interest.
(Check out another rent vs. buy calculator at frugal’s site.)
May 26th, 2006 at 7:08 am
Rent or Buy calculator…
The Get Rich Slowly weblog points to two calculators that crunch the numbers and tell you whether or not renting or buying your place is a bigger savings. If you’re already shouldering a mortgage, you’ll need to plug in all……
June 23rd, 2006 at 4:10 pm
I think buying is always better because after 25 years you own something. Have you read Rich Dad Poor dad it king of changed my mind about thinking of a mortgaged home as an investment
September 29th, 2006 at 6:06 am
I am looking for a calculator to help decide whether a private school should purchase or rent a classroom building.
Any recommendations of appropriate software would be appreciated.
You may email me at:
Dave15851585@yahoo.com
Dave R….
April 11th, 2007 at 10:40 am
We also have a rent vs. buy calculator on our website at http://www.antietammortgage.com/rentvsBuyCalc.html.
In this article, the page for the calculator in the first link has been changed and the second link was filtered by Websense (deployed by my employer) for the term “Sex” (who knows why that’s on there).
Just offering another option for readers passing by. Thanks!
January 20th, 2008 at 4:09 pm
Few more thoughts for readers of the Rich Dad ilk:
If you can purchase for a reasonable amount more on a monthly basis than the price of your monthly rental, then it is true as said above that at the end of 25 years, at least you own something. However, if in your area prices to buy are double or more the cost per month of renting, it is easy to see that that additional money, invested over 25 years, would leave you rather better situated (in terms of net worth, not to mention the ability to buy the same house outright with change to spare) than if you had bought to begin with. The realities are usually in between, and that’s the purpose of these calculators. Don’t buy into the house-as-investment mythos, unless it is actually true for your situation.
June 12th, 2008 at 1:35 pm
As a single guy, buying a house would cost more than renting for a pretty long time, but some things that can really help (and do for me) are:
I bought a 3 bedroom 2.5 bathroom house, and have had 2 people renting from me for all but 1 month of the time I’ve owned the house. That income just about covers all interest costs. My cost of principal, tax and insurance is less than I was paying in rent. After tax deductions, I’m really on the plus side.
Paying additional amounts towards principal greatly reduce the interest paid over time, helping to shift the balance. (Of course that money could be put towards other investments if I was renting).