Rent Vs Own Calculator Yahoo

Breakeven Calculation:

\[ Breakeven = \frac{(Purchase\ Price + Closing\ Costs - Rent\ Savings)}{Years} \]

Purchase Price:

currency

Closing Costs:

currency

Rent Savings:

currency/year

Years:

years

Breakeven:

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1. What is the Rent vs Own Breakeven Calculation?

The Rent vs Own Breakeven calculation helps determine when buying a home becomes financially advantageous compared to renting. It calculates the annual cost difference between owning and renting to find the point where both options cost the same.

2. How Does the Calculator Work?

The calculator uses the breakeven formula:

\[ Breakeven = \frac{(Purchase\ Price + Closing\ Costs - Rent\ Savings)}{Years} \]

Where:

\( Purchase\ Price \) — Total cost to purchase the property
\( Closing\ Costs \) — Fees associated with buying the property
\( Rent\ Savings \) — Annual savings from owning instead of renting
\( Years \) — Time period for comparison

Explanation: The equation accounts for upfront costs of buying and compares them to the ongoing costs of renting over time.

3. Importance of Breakeven Analysis

Details: Understanding the breakeven point helps in making informed decisions about whether to rent or buy based on your financial situation and how long you plan to stay in the property.

4. Using the Calculator

Tips: Enter all costs in the same currency. Be realistic about rent savings (include property taxes, maintenance, etc.). The years should reflect your expected time in the property.

5. Frequently Asked Questions (FAQ)

Q1: What's a good breakeven point?
A: Typically, if you plan to stay less than 5 years, renting may be better. A shorter breakeven suggests buying might be advantageous sooner.

Q2: Should I include mortgage interest?
A: Yes, the "rent savings" should account for all ownership costs including mortgage, taxes, insurance, and maintenance.

Q3: How accurate is this calculation?
A: It provides a simplified comparison. For precise analysis, consider consulting a financial advisor with your complete financial picture.

Q4: Does this account for home appreciation?
A: No, this basic version doesn't include potential home value appreciation, which could affect the actual breakeven point.

Q5: What about tax benefits of owning?
A: This calculator doesn't include tax deductions which could improve the economics of buying in some cases.