Here's a calculator that can show you the better financial decision.
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The decision to buy or rent is a tough one for many people. There are several factors to consider when determining the better option, such as your location, how long you plan to stay in the home, and the up-front and hidden costs of homeownership, just to name a few.
When simply comparing the cost of rent versus a mortgage payment, it's generally cheaper to own than to rent in most parts of the U.S., although there are some exceptions. However, rent is pretty much an all-in-one-payment, aside from a small payment for renter's insurance if you need it.
On the other hand, homeownership comes with several other expenses that you need to take into consideration. For example, the cost of homeowner's insurance and your property taxes will most likely be included in your monthly payments, and as any homeowner from a high-tax state like New Jersey can tell you, this can be a large amount of money.
In addition, you'll pay maintenance on the home, and this expense can vary tremendously from year to year. In one year, nothing may need fixing. The next year, your air conditioner could die on you. When you're renting, things like that are your landlord's problem, but as a homeowner, you need to budget for these expenses.
You'll also pay closing costs when you buy the home, and you'll also have to pay a real estate agent a commission when you sell the home.
On the positive side, owning a home has several potentialtax benefits. The interest you pay on your mortgage, as well as your property taxes and any mortgage insurance premiums you pay, may be used as tax deductions if you itemize.
Which is best for you?
As you can see, this isn't an easy comparison. There are too many variables involved, and every situation is different. Fortunately, you can use a financial calculator like this one to compare the financial implications of buying vs. renting your next home.
With interest rates near forty year lows, the decision to rent versus buy becomes difficult. Use this calculator to help determine which makes sense for you at this time.
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