Rent Versus Buy Mortgage Calculator
Evaluate the financial tradeoffs between renting and buying a home and determine which option makes the most sense for you. Analyze numerous scenarios including annual rent increases and changes in property value. This calculator factors in all of the expenses associated with home ownership to provide an accurate comparison between home ownership and renting
Monthly Housing Payments
- Loan Type
Should You Rent or Buy?
Do You Like Short or Long Term Commitments?
Owning a home is usually a long-term financial commitment. Most mortgages are 15-to-30 years in length as compared to most leases which are one year or shorter in length. Additionally, when you own a home you are responsible for major repairs and upkeep which can be significant financial obligations. Renters are not typically required to pay for property repairs or maintenance. People comfortable with long-term commitments and financial responsibility are better suited for owning a home while people seeking flexibility and reduced financial obligation are well suited for renting a home.
Sharing the Upside...and the Downside
Buying a home enables you to participate in the upside if your property value increases as compared to renting which does not offer that opportunity. If the value of the home you are renting increases significantly 100% of that appreciation goes to property owner instead of the renter. On the other hand, as a renter you are not exposed to the risk that the value of your property declines whereas homeowners could lose a significant amount of money, including all of their down payment, if the value of their home goes down. Although home ownership provides financial rewards when property values go up, that benefit should be balanced against the downside that property values decrease.
Making the Same Monthly Payment Never Gets Old
If you select a fixed rate mortgage, your monthly payment is set and does not change over the life of the loan. A monthly rent payment, on the other hand, is subject to increase on a yearly basis. Additionally, if you decide to or are forced to leave the property you are renting your new rent may increase significantly. Although a monthly mortgage payment involves greater financial responsibility than a rent payment, it also provides greater certainty and peace of mind. Making the same monthly mortgage payment for up to thirty years may make more financial sense than paying rent increases for thirty years.
It is About More Than Just Your Mortgage and Rent Payments
When deciding if you should buy a rent a home you should compare your monthly rent payment to more than just your mortgage payment. In addition to making your monthly mortgage payment, home owners are required to pay hazard insurance, property taxes and other potential housing expenses such as homeowners association (HOA) dues and mortgage insurance. Homeowners are also responsible for property maintenance and upkeep costs. Be sure to compare your monthly rent payment to total monthly housing expense and not just a mortgage payment when you are evaluating renting versus buying a home.
More FREEandCLEAR Mortgage Resources
Analyze the financial impact of renting and buying a home in the near term and over the long run when you include all the expenses that go into owning a home including property tax and homeowners insurance
Review the pros and cons of buying versus renting a home to understand what option matches your personal and financial objectives
Determine what size mortgage you can afford based on your monthly rent payment and current interest rates
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