Rent vs. Buy Calculators; A “Must” for Renters Nervous About Payments
Below is a repeat of a blog from September of 2014. It is still applicable today. Interesting aside: the rate quote was 1/8% higher than today’s rate, so rates are not as “bad” as we think.
We have a borrower paying $1,800 in rent who is very nervous about her potential payment increase after she purchases a home. Her “effective payment” will go down, however, when tax savings and appreciation are accounted for.
Both Trulia and Freddie Mac offer excellent “Rent vs. Buy” calculators. Even with very modest appreciation (3%) and tax rate (28% to 34%) assumptions, these calculators clearly show how much better off people are when they buy.
Here are the links to the calculators:
1. Trulia
2. Freddie Mac
For our above borrower, the Trulia Calculator, for example, indicates that her net housing costs will be 3% less after she buys a $500,000 home with 20% down.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 310167
