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Renting vs buying a house?

Our practical advice and rent vs. buy calculator can help you decide!

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Rent vs buy calculator

Owning a home can help you build wealth. Does renting or buying a house make more financial sense for you? Use our rent vs buy calculator to get an estimate.

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Calculator assumes the home’s value will increase 4% a year over a period of 7 years. Annual cost includes an estimate of the total yearly cost of property taxes, homeowners insurance, and maintenance. This calculator is made available as a self-help tool for your personal use. We do not guarantee its accuracy or applicability to your individual circumstances. Resulting calculations are for illustrative and informational purposes only and are not intended as investment or financial advice. Consult a qualified financial advisor before making important personal finance decisions. To get a better understanding of the benefits of buying a home, speak with a loan advisor at Freedom Mortgage.

Estimated benefit of buying:
$138,065
Estimated monthly payment:
$1,269
Down Payment: $54k

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Talk to Freedom Mortgage today!

 

Buying a home can be a big step. And figuring out if renting or buying is a better financial choice can be a little complicated. Our calculator compares the rent you’re currently paying with what you might pay in monthly mortgage payments, depending on the purchase price of your ideal home. It allows you to change values (like interest rate, down payment size, possible closing costs, etc.) and annual costs (like property taxes or homeowners insurance).

When calculating your estimated benefit of buying a home and estimated monthly payment, our calculator also assumes that you select a 30-year fixed-rate mortgage and will live in the home for seven years. Keep in mind that where you live can affect how much rent increases year over year or how much your home value might grow. The easiest way to be confident in your choice to rent or buy is by speaking to a qualified financial advisor.

The first question to ask is whether renting or buying makes more sense for where you are in your life. Generally speaking, if you think you might move in the next few years for work or personal reasons, then renting usually makes more sense. That's because buying a home usually has higher upfront costs than renting, and it is typically easier to move out of an apartment when your lease comes to an end than selling a house when you want to move.

People often buy houses when they feel established in their jobs, when they have found a community they like, or when they are ready to settle down and maybe start a family. In these cases, people are buying homes with the expectation that they will live there for several years. And this expectation is important because one key element of deciding whether renting or buying makes more sense is how long you plan to live in the home.

The next question to ask in your rent vs buy decision is "Can you afford a home?" To buy a home you usually need to make a down payment. (Veterans who qualify for a VA loan are an exception.) You will probably need to pay closing costs. Once you own the home, you will need to make monthly principal and interest payments and may need to pay mortgage insurance. You'll have to pay property taxes and homeowners insurance in addition to any maintenance or repairs. Depending on where you buy, you may need to pay condo or homeowners association fees and flood insurance too.

The costs of buying a home come with many upsides too of course! You can get a sense of ownership and pride. You can make the renovations and improvements you want when you own your home. Homeownership gives you roots in a community and gives you a place to have a family and create memories. Plus, owning a home can also help you build wealth.

If you want help calculating how much you can afford in a monthly mortgage payment, check out our Mortgage Affordability Calculator.

Buying a house comes with costs but it also comes with financial benefits. When you buy, you build home equity by paying down your principal and when the market value of your home rises. There can potentially be tax benefits to owning a home, like the mortgage interest tax deduction (consult a tax advisor for more information regarding the deductibility of interest and charges). And when you sell your home, you may be able to sell it for more money than you paid to buy it. That's money you can put in your pocket or use to purchase your next home.

Our rent vs. buy calculator takes many of these costs and benefits into consideration. You'll see it asks for much of the information we just discussed about buying and owning a home. It also asks about the monthly cost of rent you might be paying. The calculator takes these numbers to create an estimate of whether renting or buying makes more sense. Change the numbers in any of the fields and the estimate will update!

Here are some examples of the benefits of continuing to rent:

  • Lower upfront costs
  • Flexibility to move to new areas
  • Not responsible for maintenance and maintenance costs

Here are some examples of the benefits of continuing to rent:

  • Ability to build home equity when the value of your home increases
  • Predictable principal and interest payments that won’t increase with a fixed-rate mortgages
  • Freedom to paint, decorate, and adjust your living space

The decision to buy a home is affected by many things. Your personal preferences. Whether you can afford to buy and own a home. And whether renting or buying makes more sense to you.

Freedom Mortgage Corporation is not a financial advisor. The ideas outlined above are for informational purposes only, are not intended as investment or financial advice, and should not be construed as such. Consult a financial advisor before making important personal financial decisions.

Take your time, think about your options, then call Freedom Mortgage at 844-543-0764 or Get Started online. We'd love to help you get into a new home.

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