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Mortgage Calculator: Rent vs. Buy Calculator

Debating between renting and buying a home requires serious evaluation backed by concrete facts and numbers. That is why individuals deciding between the two should rely on Mortgage Marvel's Rent vs. Buy to do the math and see the financial reality.

Determining whether or not to rent or buy a home takes more than looking at mortgage payment amounts to thoughtfully answer the question. The Rent vs. Buy mortgage calculator helps potential home buyers weed through the fees, taxes, and monthly payments in order to enable a good financial decision making process. Individuals simply need to click the "View Report" button for a detailed look at the results.



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GLOSSARY

Price of Home
The purchase price of a home that a consumer longs to buy.

Cash on Hand
Available cash and liquid assets needed for the down payment and all closing costs.

Interest Rate
The money charged in order to borrow a lender's money. Interest takes into account the risk and cost to the lender for a loan. The interest rate on a fixed rate mortgage depends on the going market rate and how many discount points are paid up-front. An adjustable rate mortgage's interest is a variable rate made up of the index and the lender's margin.

Term in Years
The number of years it will take to repay a home loan obligation. The most common mortgage loan term lengths are 30 years and 15 years. For balloon mortgages, the most common terms are 5 years and 7 years. After that time period concludes, individuals will need to either refinance or pay off the remaining balance. For interest only loans, consumers will have a balloon payment for the entire principal balance at the end of the loan term.

Property Tax Rate
In relation to a Mortgage Marvel mortgage calculator it is an estimate of the property tax rate. For calculation sake, consumers should estimate the annual real estate taxes as a percentage of the home's value. For example, entering 1% for a home valued at $100,000 home equals $1,000 per year in property taxes.

Home Insurance Rate
The home owner's insurance rate to be entered into the mortgage calculator. Consumers should estimate the home insurance as a percentage of the home's value. For example, entering 0.3% for a $100,000 home equals $300 per year for homeowners insurance.

Loan Origination Rate
This is the percentage of a new mortgage amount that is paid to the lender as the loan origination fee.

Points Paid
This is the number of discount points paid to a lender in order to reduce the interest rate on a mortgage. Each point costs 1% of a mortgage balance.

Other Closing Costs
Estimate of all other closing costs for a loan being tabulated on a Mortgage Marvel mortgage calculator. This total includes appraisal fees, credit report fees, title charges and any other miscellaneous fees that must be paid.

Total Closing Costs
The total up-front costs to close a home loan. This is the sum of the home loan origination fee, amount paid for points and other closing costs.

Total for Down Payment
The total funds remaining for down payment in relation to a Mortgage Marvel mortgage calculator.

Loan Amount
The total amount of a home loan.

Investment Return
The annual percentage return an individual would receive if choosing to invest closing costs and down payment instead of purchasing a home.

Monthly Rent Payment
The amount an individual pays to rent living accommodations per month.

Income Tax Rate
An estimate of an individual's current income tax rate to be entered into a Mortgage Marvel mortgage calculator. The chart linked below can be used to estimate tax brackets based on Federal 2013 taxable income. Information about estimating state tax rate can be found at http://www.taxadmin.org/fta/rate/ind_inc.pdf.

Expected Inflation Rate
The inflation rate used to adjust amounts subject to annual increases. This includes rent, insurance and tax payments.

Home Appreciates At
In relation to a Mortgage Marvel mortgage calculator the term reflects the annual appreciation expected in congruence with a home purchase.

Home Sales Commission
The percent of a home's selling price expected to be paid to a broker or real estate agent when a home is sold.

House Payment
The total of principal, interest, taxes and insurance paid per month for a home. Insurance includes mortgage insurance and homeowner's insurance.

Principal Payment
The total principal paid per month on a mortgage.

Tax Savings
The value of the tax deduction individuals will receive on mortgage, interest and property taxes. For example, if there is $900 in interest and $100 property taxes per month, the value of the tax deduction would be $250. (At a tax rate of 25%).

Net House Payment
The total house payment minus the value of the tax deduction and principal payment.

Net Home Price
The net selling price of a home after subtracting any sales commission.

Monthly Payment (P&I)
The monthly principal and interest payment.

In relation to a Mortgage Marvel mortgage calculator the term refers to the fixed rate mortgage or the interest only payment for an interest only ARM.

Monthly PMI
The monthly cost of private mortgage insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.9% of the loan balance each year. Monthly PMI is calculated by multiplying the starting loan balance by this percent and dividing by 12. When the loan balance exceeds 22% of the original purchase price, the PMI payment drops to zero.


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 can not 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.