Interested in buying property but not sure if you’re better off sticking with your rental? The truth is every situation is different. There are a lot of factors at play and nothing beats simply running the numbers on your ideal home.
First, visit some properties and get a realistic idea of what it would cost you to rent; do the same with what it would cost to purchase. Then, speak to a mortgage professional in your area, find out what type of rate you could get, and work out what your monthly mortgage payment would be. Add to that any additional monthly maintenance or HOA fees, homeowners insurance and real estate taxes and, voila, you’ve got your full monthly payment to own.
If you can get a good mortgage rate and have saved money for a down payment, owning can often be less expensive than renting on a monthly basis, and you’re building equity in your property. Of course, there are also tax implications, inflation rates, closing costs, etc., to consider when figuring out what’s really best in the long run.
In my own case, my husband and I were renting our condo in Brooklyn before we decided to purchase. Our monthly payments actually went down significantly after we purchased, and the value of our property has significantly increased. So, deciding to purchase vs. rent was a win for us.
Here are a few great tools to help you figure out what’s best for you, based on your particular financial situation.
The New York Times, The Upshot: Rent vs. Buy Calculator
This comprehensive calculator takes you through each important number, with handy slider bars and explanations every step of the way. Super handy: it utilizes both dollar amounts and percentages for most figures. So, if you don’t know your property tax rate, but you know the annual tax amount (typical in NYC condo purchases, as most property listings show the monthly tax amount), then you’re all set.
This one has a handy bar chart on the side so you can see how the rent vs. buy relationship changes as your financials change — a great way to get a quick visual on the major factors.
Calculators by CalcXML: Rent vs Buy Home
This is a clean and simple form that allows you to enter the relevant numbers, click “submit” and get a verdict on whether renting or buying is best for you, along with an exact figure of how much you would save over the term of your perspective mortgage, and a summary table of the relevant numbers.