1. What is the Rent vs Buy Calculation?

The Rent vs Buy calculation helps compare the financial implications of renting versus buying a home by calculating the net cost of buying after accounting for various factors.

2. How Does the Calculator Work?

The calculator uses the net cost equation:

Where:

• Buy Costs — Total costs associated with purchasing the home
• Sell Value — Expected future sale value of the home
• Mortgage — Total mortgage payments over the period
• Rent Savings — Savings from not paying rent during ownership

Explanation: This calculation provides a comprehensive view of the true cost of buying a home compared to renting.

3. Importance of Net Cost Calculation

Details: Understanding the net cost helps in making informed financial decisions about whether renting or buying makes more sense for your situation.

4. Using the Calculator

Tips: Enter all values in dollars. Be realistic about future sell value and consider all associated costs when calculating buy costs.

5. Frequently Asked Questions (FAQ)

Q1: What should be included in Buy Costs?
A: Include down payment, closing costs, maintenance, property taxes, insurance, and any renovation costs.

Q2: How do I estimate Sell Value?
A: Research local market trends and consider consulting a real estate professional for accurate projections.

Q3: Should I include principal payments in Mortgage?
A: Yes, include both principal and interest payments over your planned ownership period.

Q4: What are Rent Savings?
A: This represents the rent you would have paid if you didn't own the home during the ownership period.

Q5: How does this help in rent vs buy decision?
A: A lower net cost suggests buying might be financially advantageous, while higher net cost may favor renting.