Rent vs. Buy

Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. This calculator helps you weed through the fees, taxes and monthly payments to help you make a decision between these two options. This report is based on the original purchase price, fees and taxes payable at that time. Insurance and tax costs can fluctuate from year to year. Click the "View Report" button for a detailed look at the results.
By changing any value in the following form fields, calculated values are immediately provided for displayed output values. Click the view report button to see all of your results.
Your home purchase breaks even in approximately 6.9 years.
Loan amount:
$204,898
Monthly payment (PI):
$1,038.19
Report amortization:
Report amortization
**FIG_GRAPHTITLE** Line Graph: Please view the report to see detailed calculation results in tabular form.
**FIG_GRAPHTITLE** Column Graph: Please view the report to see detailed calculation results in tabular form.
**FIG_GRAPHTITLE** Column Graph: Please view the report to see detailed calculation results in tabular form.

Definitions

Price of home

Purchase price of the home you wish to buy.

Interest rate

The current interest rate you expect to receive on your mortgage.

Term in years

The number of years over which you will repay this loan.

Monthly PMI

Monthly cost of Private Mortgage Insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.5% of your loan balance each year.

Loan amount

Calculated amount of the loan for this home purchase.

Monthly payment (PI)

Monthly principal and interest payment.

Property tax rate

Your property tax rate. 1% for a $100,000 home equals $1,000 per year in property taxes.

Home insurance rate

Your homeowner's insurance rate. 0.5% for a $100,000 home equals $500 per year for homeowner's insurance.

Assoc. & maintenance fees

Any association fees you are required to pay per month with the ownership of this home. Also include any other maintenance costs you expect to incur with the ownership of this home that you are not paying while you continue to rent.

Cash on hand

Cash you have for the down payment and closing costs.

Loan origination rate

The percentage the lending institution charges for its origination fee. 1% for a $100,000 home equals $1,000.

Points paid

The total number of points paid to reduce the interest rate of your mortgage. Each point costs 1% of your mortgage balance.

Other closing costs

Estimate of all other closing costs for this loan. This should include filing fees, appraiser fees and any other miscellaneous fees paid.

Total for down payment

Total funds remaining for down payment.

Monthly rent payment

Amount you currently pay for rent per month.

After-tax investment return

The rate of return, after taxes, you could receive if you invested your closing costs and down payment instead of purchasing a home.

The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2017, had an annual compounded rate of return of 8.3%, including reinvestment of dividends. From January 1, 1970 to December 31st 2017, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.6% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return examples do not reflect sales charges and other fees that investment funds and/or investment companies may charge.

Income tax rate

Your current marginal income tax rate. Use the ‘Filing Status and Income Tax Rates Table’ to assist you in estimating your federal tax rate.

Filing Status and Income Tax Rates 2018*
Tax RateMarried Filing Jointly or Qualified Widow(er)SingleHead of HouseholdMarried Filing Separately
*Caution: Do not use these tax rate schedules to figure 2017 taxes. Use only to figure 2018 estimates. Source: 2017 Tax Cuts and Jobs Act
10%$0 - $19,050$0 - $9,525$0 - $13,600$0 - $9,525
12%$19,050 - $77,400$9,525 - $38,700$13,600 - $51,800$9,525 - $38,700
22%$77,400 - $165,000$38,700 - $82,500$51,800 - $82,500$38,700 - $82,500
24%$165,000 - $315,000$82,500 - $157,500$82,500 - $157,500$82,500 - $157,500
32%$315,000 - $400,000$157,500 - $200,000$157,500 - $200,000$157,500 - $200,000
35%$400,000 - $600,000$200,000 - $500,0000$200,000 - $500,000$200,000 - $300,000
37%Over $600,000Over $500,000Over $500,000Over $300,000
Expected inflation rate

This is what you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI). From 1925 through 2017 the CPI has a long-term average of 2.9% annually. Over the last 40 years highest CPI recorded was 13.5% in 1980. For 2017, the last full year available, the CPI was 2.0% annually as reported by the Minneapolis Federal Reserve. Inflation rate is used to adjust amounts subject to annual increases. These amounts include rent, insurance and tax payments.

Home appreciates at

Annual appreciation you expect in the home you are purchasing.

Future sales commission

The percent of your home's selling price you expect to pay to a broker or real estate agent when you sell your home.

House payment

Total of principal, interest, taxes and insurance (PITI) and maintenance paid per month for your home. Insurance includes Principal Mortgage Insurance (PMI) and homeowner's insurance.

Initial tax savings

The value of the tax deduction you receive on your mortgage's interest and home's property taxes. For example, if you have $900 in interest and $100 property taxes per month, the value of the tax deduction would be $250 (at a tax rate of 25%).

Initial principal payment

Total of principal paid per month on your mortgage.

Net house payment

Your initial house payment minus the value of the tax deduction and principal payment.

Net home price

Net selling price of your home after subtracting any sales commissions.



Sunmark Federal Credit Union
1187 Troy Schenectady Road
Latham, NY

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.