Do you rent or do you buy your next home? Many of us ponder this thought as we get ready to leave mom and dad, graduate from college, or move to a new location. A rent vs buy calculator is a great tool to help you make this big decision.
In this post, I’m going to discuss a new rent vs buy calculator on the LendingTree website and how it can help you determine whether you should rent or buy your next place.
Step 1: Home Information
In this section, you enter a zip code, desired home price, desired monthly rent payment, and how long you plan on staying in your next home.
Step 2: Assumptions
In this section, you enter assumptions about home buyer and renting to provide a more accurate calculation. For example, you’d enter your down payment, loan interest rate, cost of of selling the home once you move again, and closing costs. LendingTree provides some defaults, so you can get a general idea, but you should consult a loan officer and/or an agent to help you input the other info as it pertains to your city.
Step 3: Calculate
After you have completed the home information and assumptions sections, click the big blue “calculate” button and the big green area will either say, “we recommend: buying” or “we recommend: renting”.
After playing around with some numbers using the median cost of a condo or townhome in my zip code, which is currently about $480,000, it looks like as long as you plan on living in the home 3 years or longer, it makes more sense to buy a condo, rather than rent an apartment.
Two big reasons buying tends to make sense in the long run is due to tax savings and home value appreciation. Consult your tax adviser about how owning a home can reduce your tax liability. As home values increase, your equity increases, thus increasing your net worth. Once you sell the home, you can profit from this appreciation. Note that the market doesn’t always appreciate, so if prices decline, you run the risk of losing value.
Use the calculator today at www.lendingtree.com/rent-vs-buy-calculator.
Try this Buy vs Rent Calculator in Your City
Leave me a comment below and tell me if you used this calculator to help you decide whether to buy or rent your next home. Thanks for reading!