1. What is the Rent Vs Mortgage Calculator?

The Rent Vs Mortgage Calculator helps you determine the breakeven point between renting and buying a property by comparing the total costs of purchasing a home versus continuing to rent.

2. How Does the Calculator Work?

The calculator uses the breakeven equation:

Where:

• \( Purchase\ Price \) — Total cost of the property
• \( Closing\ Costs \) — Fees associated with purchasing the property
• \( Rent\ Savings \) — Annual savings from not renting
• \( Years \) — Time period for comparison

Explanation: The equation calculates the annualized cost difference between buying and renting over a specified time period.

3. Importance of Breakeven Calculation

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

4. Using the Calculator

Tips: Enter all costs in the same currency. Be sure to include all relevant closing costs and accurate rent savings. The years value should reflect your expected time in the property.

5. Frequently Asked Questions (FAQ)

Q1: What's included in closing costs?
A: Closing costs typically include loan origination fees, appraisal fees, title insurance, and other transaction-related expenses.

Q2: How do I calculate rent savings?
A: Rent savings is the difference between your current annual rent and what you would pay annually for the mortgage (principal + interest).

Q3: What does the breakeven result mean?
A: A positive result indicates how much more expensive buying is per year compared to renting. A negative result shows how much you save annually by buying.

Q4: Should I consider other factors beyond breakeven?
A: Yes, also consider property appreciation, tax benefits, maintenance costs, and personal preferences about home ownership.

Q5: What time period should I use?
A: Use the number of years you expect to stay in the property - typically 5-10 years for a meaningful comparison.