Is it always a waste of money to rent if you can afford to buy a home instead? Is buying a home the right housing move for everyone? Many factors can influence the decision to buy a house or continue renting, and you should weigh them all carefully before making a choice. Our Home Option Calculator can help you organize the financial variables and decide what path is best for you right now.
Rent vs. Buy Definitions
Annual appreciation rate — How much will your home gain in value each year you live in it? A local real estate agent can tell you what the anticipated rate is for your area, or you can check online resources.
Realtor fees — Buyers won’t have to pay realtor fees, but you will down the road when you sell your home. Realtors commonly ask for about 6% of a home’s selling price as their fee.
Closing costs — As a buyer, you will be responsible for paying closing costs. These are fees associated with finalizing the purchase of a house, and they can include a fee for processing the loan paperwork, inspection costs, appraisal and survey fees, title search and title insurance fees, escrow deposit, attorney fees and discount points.
Marginal tax bracket — Basically, this is the tax bracket you fall into based on your annual gross income and IRS tax rate schedules.
Before tax return on savings — Homeowners can usually deduct some of their property tax and mortgage interest from their federal taxes.
Assumed annual inflation rate — How much will the cost of everything — including the costs associated with owning a home — increase in a year? A high anticipated inflation rate could offset the cost benefits of home ownership.