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Rent Vs Buy

Who This Calculator is For: Users trying to decide whether they will be better
off buying a home or continuing to rent over the next several years.

What This Calculator Does: This calculator compares a user's net outlay over
a specified period for both buying or renting. It also calculates the maximum rent
one could pay to break-even over the period specified and computes
the month in which the cost of renting exceeds the cost of owning.

Enter the Following:
Information About Your Current Rental Situation
  Period Over Which Comparison is to be Made, in Years?
  Current Monthly Rent  (e.g. 850)
  Estimated Percent Increase in Rent Per Year  (e.g. 5)
  Monthly Rental Insurance  (e.g. 20)
Information About You and the Home You Wish to Buy
  Estimated Property Appreciation Rate Per Year  (e.g. 6.0)
  Income Tax Bracket ( e.g. 27 )
  Rate of Interest on Savings  (e.g. 3.5)
  Monthly Real Estate Taxes  (e.g. 200)
  Estimated Percent Increase in Real Estate Tax Per Year  (e.g. 2.0)
  Monthly Home Owners Insurance  (e.g. 45)
  Monthly Home Owners Dues, if applicable  (e.g. 185)
Loan Information
  Purchase Price (e.g. 225000)
  Down Payment (in Dollars)
  Down Payment as a Percent of Purchase Price ( Calculated Automatically )
  Loan Amount  ( Calculated Automatically )
  Interest Rate on Loan  (e.g. 7.50)
  Loan Term
  Mortgage Insurance (Monthly Premium Plan) ( Calculated Automatically )
  Monthly Mortgage Payment  ( Calculated Automatically )
  Monthly Mortgage Insurance Payment ( Calculated Automatically )
  Points  (Dollar Amount or Percentage of Loan)
  All Other Closing Costs
  Estimated Costs of Sale as a Percent of Sale Price (e.g. 8.5)


This is your marginal tax rate, the rate at which each additional dollar of income will be taxed. If you pay only Federal income taxes, it is the highest tax bracket you used when you calculated your taxes. Federal tax brackets currently are: 10%, 15%, 25%, 28%, 33%, and 35%. If you also pay state and/or local income taxes, these marginal rates can be added to the Federal rate. For example, if you had to pay 25% to the IRS and 5% to the state of Pennsylvania, your tax bracket is 30%. To perform a "pre-tax" analysis enter zero (0) as the tax rate. The period cannot exceed the shortest mortgage term. The period may be stated in fractions. For example, 25 months would be entered as 2.083 years, 26 months would be 2.167 years, and 27 months would be 2.25 years, etc. All settlement costs that might differ between any two deals. This includes all lender fees of any sort, and all third party fees (such as title insurance, apprraisals and credit report), but excluding charges of governments which cannot vary from one deal to another. Do not include escrow reserves for taxes and insurance, or prepaid (per diem) interest. This is the interest rate you could earn on the monies you spend during the period you are in your home. For most people, it would be the interest rate on a bank account or a money market fund. In after-tax cost comparisons, this figure is adjusted to an after-tax basis. The size of the mortgage insurance monthly premium is triggered by the down payment percentage. Mortgage insurance premiums drop significantly as the down payment crosses the 3%, 5%, 10%, 15% and 20% levels. When deciding on your down payment be sure to take this into account. Any number up to 10 will be assumed to be a percent of the loan amount. Any number above 10 will be treated as a dollar amount. Estimate all closing costs other than points and enter your estimate for each loan here. For further information, read "How to Shop Settlement Costs". (Click on link at bottom of page) This is the amount you must save at the stipulated savings rate to provide your desired increase in the down payment. Given the down payment and term you have selected, the numbers shown are typical annual premium rates for "monthly premium plans" that involve no upfront premium. You can override these numbers if you are quoted different rates for monthly premium plans.