Q1: Should I rent or buy a home?
The decision depends on many factors: how long you plan to stay (buying usually better if 5+ years), local market conditions, your financial stability, lifestyle flexibility needs, and whether you want to build equity. This calculator compares monthly costs, but consider total costs including maintenance, taxes, and opportunity costs.
Q2: What costs are included in the rent vs buy comparison?
This calculator compares monthly rent to monthly mortgage payment (principal + interest). It doesn't include: property taxes, insurance, maintenance, HOA fees, closing costs, or opportunity cost of down payment. For a complete comparison, factor in all ownership costs vs. rent.
Q3: How does the down payment affect the comparison?
A larger down payment reduces your monthly mortgage payment and total interest paid, making buying more attractive. However, it also represents money that could be invested elsewhere. Consider the opportunity cost of tying up capital in a down payment.
Q4: What is the break-even point for buying vs renting?
The break-even point is when total costs of buying (including all fees, maintenance, etc.) equal total costs of renting. Generally, if you plan to stay less than 3-5 years, renting may be better. If staying 5+ years, buying often becomes more cost-effective, especially with appreciation.
Q5: How do interest rates affect the rent vs buy decision?
Lower interest rates make buying more attractive by reducing monthly mortgage payments. Higher rates increase mortgage costs, potentially making renting more favorable. Current rates significantly impact the monthly payment comparison shown in this calculator.
Q6: What other factors should I consider beyond monthly costs?
Consider: property appreciation potential, tax benefits (mortgage interest deduction), maintenance responsibilities, flexibility to move, building equity vs. "throwing away" rent, local market trends, and your long-term financial goals. Monthly cost is just one factor in the decision.