Buy_vs._rent_home_calculator

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					Home Rent or Buy Analysis
Initial Assumption
After-tax rate of return on investments           30.00%
Marginal tax rate                                 15.00%
Estimated annual appreciation of home             7.00%
Down payment on home                               $1
Estimated closing costs                           $7,000
Estimated purchase price of home                 $250,000
Monthly rent                                      $1,200
Cost of Renting
Annual rent                                      $14,400
Renter's annual insurance premium                 $1,200
Total annual cost of renting                     $15,600
Cost of Buying
Mortgage loan amount                             $249,999
Annual interest rate                              6.000%
Term of mortgage (years)                           40
Monthly mortgage payment                          $1,376
Annual mortgage payment                          $16,506
Property taxes                                    3,250
Homeowner's insurance                             $600
Maintenance                                       $500
Opportunity cost of buying                        $2,100
Total cost of buying                             $22,957

Less Adjustments:
Principal reduction in mortgage                   $1,506
Tax savings of interest deductions                $2,250
Tax savings of property tax                       $488
Total adjustments                                $4,244
Annual after-tax cost of home ownership          $18,713
Less:
Estimated annual appreciation in value of home   $17,500
Net annual cost of home ownership                $1,213

				
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posted:5/17/2012
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