Welcome > Resources > Mortgage Calculators > Should You Rent or Buy? ...

Should You Rent or Buy?

Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. This calculator helps you weed through the fees, taxes, and monthly payments to help you make a good financial decision. Click the "View Report" button for a detailed look at the results.

Definitions

Price of home

Purchase price of the home you wish to buy.

Cash on hand

Cash you have for the down payment and closing costs.

Interest rate

The current interest rate you can receive on your mortgage.

Term in years

The number of years over which you will repay this loan.

Property tax rate

Your property tax rate. 1% for a $100,000 home equals $1,000 per year in property taxes.

Home insurance rate

Your homeowner's insurance rate. 0.5% for a $100,000 home equals $500 per year for homeowner's insurance.

Loan origination rate

The percentage the lending institution charges for its origination fee. 1% for a $100,000 home equals $1,000.

Points paid

The total number of points paid to reduce the interest rate of your mortgage. Each point costs 1% of your mortgage balance.

Other closing costs

Estimate of all other closing costs for this loan. This should include filing fees, appraiser fees and any other miscellaneous fees paid.

Total closing costs

Total upfront costs to close your loan. This is the sum of the loan origination fee, amount paid for points and other closing costs.

Total for down payment

Total funds remaining for down payment.

Mortgage amount

Total amount of loan.

Investment return

The rate of return you could receive if you invested your closing costs and down payment instead of purchasing a home.

The actual rate of return is largely dependant on the type of investments you select. From January 1970 to December 2003, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.7% per year. During this period, the highest 12-month return was 64%, and the lowest was -39%. Savings accounts at a bank pay as little as 1% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.

Monthly rent payment

Amount you currently pay for rent per month.

Income tax rate

Your current marginal income tax rate.

Expected inflation rate

Inflation rate used to adjust amounts subject to annual increases. These amounts include rent, insurance and tax payments.

Home appreciates at

Annual appreciation you expect in the home you are purchasing.

Future sales commission

The percent of your home's selling price you expect to pay to a broker or real estate agent when you sell your home.

House payment

Total of principal, interest, taxes and insurance (PITI) paid per month for your home. Insurance includes Principal Mortgage Insurance (PMI) and homeowner's insurance.

Principal payment

Total of principal paid per month on your mortgage.

Tax savings

The value of the tax deduction you receive on your mortgage's interest and home's property taxes. For example, if you have $900 in interest and $100 property taxes per month, the value of the tax deduction would be $280. (At a tax rate of 28%).

Net house payment

Your house payment minus the value of the tax deduction and principal payment.

Net home price

Net selling price of your home after subtracting any sales commissions.

Monthly PI

Monthly principal and interest payment.

Monthly PMI

Monthly cost of Private Mortgage Insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.5% of your loan balance each year.

The mortgage calculators are provided by KJE Computer Solutions, LLC and made available to NUMBER1EXPERT as self-help tools for your independent use and are not intended to provide investment advice. We can't guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

Tax Considerations >New 1031 Exchange Rules One of the most popular "tax deferring" strategies for real estate owners who are selling one property and acquiring another is the use of Section 1031 of the Internal Revenue Code. It is an effective way to defer paying income tax on capital gain generated by the sale of a property when you intend to reinvest the proceeds in a similar, "like-kind" property. Almost any kind of real property is considered "like-kind" with any other real property. A recently enacted law closes what was considered a loophole in the Section 1031 rules. In some cases, owners of investment real estate have used the 1031 Exchange to swap their investment property for real estate that could be readily converted to an owner-occupied residential property. After the exchange, they made the property into their principal residence, lived in it for a couple of years, then sold it. Now the American Job Creation Act of 2004 has ruled that properties converted from a 1031 exchange property into a residence must be held and used as a principal residence for at least five years to qualify for the tax exemption. Otherwise, the basic tax-deferring benefits of 1031 exchanges remain the same. Consult your tax advisor for more detailed information. See All Tips In The "Tax Considerations" Category > See Complete Library Of Hundreds Of Tips In 30+ Categories >

Q  1992 marked the first year since before the Civil War that there were fewer than 2 million ________ in the United States? A  There are fewer than 2 million farms, and agricultural land is still being carved up for residential and commercial uses. See More Real Estate Trivia >

Ursula Dahle Keller Williams Realty Platinum Partners 220 Heritage Walk, Suite 101 Woodstock, GA. 30188 Direct: 678-569-4044 Main Office: 678-494-0644 Fax: 678-484-4044 Direct Fax: 678-484-4044 Email Ursula: ursula@callursula.com Email Renee: renee@reneepruitt.com Accessibility is what we are all about. When you want to buy or sell a home, you want to know that your REALTOR® is there and working for you. Why do some agents have all of the listings and others are just getting by with a few? It's the Experience, Service, and Results that a good REALTOR® brings to the table. I specialize in the sale and marketing of residential real estate and have lived in this area for many years. My team understands your needs and wants the outcome of your transaction to be as smooth as possible. Whether you are buying or selling a home, we are there for you. www.callursula.com is brought to you by Ursula Dahle NUMBER1EXPERT in real estate for Woodstock, Towne Lake and Cherokee County, Georgia Read Ursula Dahle's Privacy Guarantee, Terms of Service, and Free & Without Obligation Pledge

NUMBER1EXPERT®
© Best Image Marketing and/or its clients.
All rights reserved. All information deemed reliable but not guaranteed.