Rent Vs. Own
Some people just add responsibility and adequate finances together and easily conclude that the obvious answer is homeownership. These are the people who have been planning their future for years, first establishing a stable income, then getting married, then purchasing a home and having children. For those who follow this predetermined plan there is no question about whether to rent or own, but for others things aren't quite so simple.
For some people renting provides the opportunity to take advantage of more personal and financial freedom. Some people simply don't feel the need to settle down so they choose to rent instead of tie themselves down to anything. While this lifestyle might be convenient, especially for the young and single, it is usually not the most financially prudent choice.
People who continue to rent year after year end up paying thousands of dollars to landlords that could otherwise have been invested in paying off a mortgage. The problem usually ends up being that renters just don't know when the right time to buy is and how much money they will need to do so. This is where Rent vs. Own Calculators come in handy. These calculators can help people who don't know much about homeownership realize how much they can afford to spend on a home and how monthly payments on a mortgage can compare to monthly rent paid to a landlord.
People who rent the same place for more than five years are almost always better off purchasing a place. This is obvious when you consider that a renter who pays $700 per month to a landlord will end up doling out $8400 per year to rent their place and over a period of five years this same landlord will have collected $42,000 from this renter. This is $42,000 that could have gone into paying off a mortgage. Often people who rent don't realize the accumulated amount that they end up forking over to landlords and if they did they might seriously reconsider homeownership.
Rent vs. Own Calculators can help renters put homeownership in perspective by calculating the type of mortgage they will be able to handle based on what each individual pays in rent but to make use of these handy online devices individuals must gather together a few necessary figures.
Rent vs. Own Calculators Require:
- Rent Information
- Mortgage Information
- Information about the home you are considering purchasing
- Your financial information
Rent vs. Own calculators are fabulous because they can give you financial advice that will greatly influence your life from the comfort of your own home without any beating around the bush. Instead of going to a lender or real estate professional who may bombard you with jargon that you don't understand Rent vs. Own Calculators will give you the hard facts you need in order to decide whether renting or owning is best for you.
The only thing Rent vs. Own calculators are interested in are the numbers.
The first figure that these robotic financial gurus take into consideration is your renting information. They don't need to know whether or not you stained the walls or broke the handle off the kitchen sink, just how much you are contributing towards rent each month.
Required Renting Information Includes:
- Monthly rent in dollars
- Amount of renter's insurance paid monthly in dollars (if any)
- Estimated annual rent increase
In order to properly calculate the type of home you will be able to afford Rent vs. Own Calculators also need to take into consideration specific mortgage information. Factors such as the interest rate and the length of the mortgage will ultimately determine the amount that each individual forks over in mortgage payments so it is essential to consult a few lenders to see the types of rates and terms they are willing to offer before making use of a Rent vs. Own Calculator.
Required Mortgage Information Includes:
- The amount of the mortgage you will apply for (or the principal amount borrowed)
- The interest rate your lender will offer
- The amount you will incur in mortgage fees
- The length of your mortgage
- The number of years you plan to own the house before selling
The amount you end up paying for your mortgage is entirely dependant on how quickly you pay it off, the type of payment plan you choose, mortgage rates and, of course, the type of property you purchase. Mortgage payments are made up of two parts the principle, which is the amount that was initially borrowed, and the interest, which is calculated by the lender according to current mortgage rates.
Using A Rent vs. Own Calculator
The principal and interest of the mortgage are two of the most important figures to have when you are attempting to use a Rent vs. Own calculator.
Another important set of costs to investigate before using a Rent vs. Own Calculator are the mortgage fees. The bulk of fees come in the form of closing costs.
Closing costs include attorneys fees, taxes, an origination fee, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs can run anywhere from $2000 to $5000 so they can often make or break whether or not homeownership is plausible for certain individuals.
The length of a mortgage will ultimately determine how much is paid in total interest over the years. Typically mortgages are given with either 15 or 30-year terms and the longer the term, the more interest will be paid. Rent vs. Own Calculators can give you an estimate of how much money you will need to contribute each month to your mortgage for each type of term so that you can decide which plan is most appropriate for you.
Rent vs. Own Calculators also take into consideration how long you will own the home you purchase. The number of years that you own the home will result in varying amounts of equity and Rent vs. Own Calculators know that.
Information about the home you are considering purchasing is essential to Rent vs. Own Calculators. Your specific home information will allow the calculator to figure out what sort of mortgage you will require and what the monthly payments will be.
Required Home Information:
- Purchase price
- Cost of yearly taxes
- Estimated yearly maintenance costs
- Yearly insurance costs
- Estimated appreciation
- Estimated selling cost
Consider All Costs
Consulting a Rent vs. Own calculator will force potential homeowners to take all of the above factors into consideration. This is important because most people who rent really have no idea how much they can afford to pay for a home of their own.
Not only must all new homebuyers take into consideration the cost of the house, but they also must assess what sort of taxes and insurance they will pay in their particular area, how much repair the home requires and how much it is expected to appreciate or depreciate in value over the years.
Once you have entered all of the necessary information into a Rent vs. Own Calculator it can not only give you information about the type of home you can afford and the monthly payments that you will be able to make, it can also tell you the rate that you can expect to make on your investment. Most calculators do this by figuring out the difference between your rental payments and the amount you will put into mortgage payments.
Ultimately homeownership is a personal decision that comes down to having enough money to invest and enough gumption to stick it out in one place for a prolonged amount of time.
Some people choose to rent until the perfect home becomes available while others jump at the first opportunity to get into a home of their own and away from seedy landlords.
Bottom Line
The bottom line is that everyone deserves to know what there options are when it comes to homeownership. Many people will keep on renting for years thinking that buying a home is too burdensome or too expensive, but these people usually haven't seriously considered the advantages of buying versus renting.
Convenient and easy-to-use Rent vs. Own Calculators can help renters realize what the type of homes they can afford and clue them into the many factors that add up to producing a responsible and informed homeowner.
