Does it make better financial sense for Mike and Jen to rent or buy given their current $1,400 rent payment? How much home can they buy knowing they can afford a $1,400 monthly mortgage payment and can put 5% down at today's rates?
Let's find out using our new calculators with the following criteria:
|Mike and Jen's Current Rental Scenario||Mike and Jen's Potential Homeownership Scenario|
*These inputs will result in a monthly mortgage payment around $1,400
We've also put in other assumptions and costs for Mike and Jen, including: a 3% home appreciation rate, a $1,500 origination charge, $1,000 for settlement services, 3% for selling costs, a 33.8% state and federal tax rate, and a savings rate of zero.
You ready? With this scenario, Mike and Jen will save $106,513 by buying instead of renting over a seven year period. If they stay in their home for 15 years, they will save $369,155. Thirty years? $1,592,717.
These figures include costs for Primary Mortgage Insurance (known as PMI) that they will have to pay until they reach a 20% loan to value ratio.
Please note that our calculators are provided for guidance only. For specific calculations, please work directly with your lender.
Want to receive our weekly blog round up? Subscribe at right ─ and each Friday we'll send you our latest posts.
Have a comment or question about this post? Email us to let us know what's on your mind.