Buy A House Or Rent?

This spreadsheet will help you answer the question that many Americans ask, should I keep renting or buy a home? Buy
advantages, but many times these are overstated, and hard to figure out exactly how much these savings are.

Instructions:
sense financially to rent or buy, and how much money you'll save by buying or renting. This only considers the time from
that you are considering buying. Please read the disclaimer at the bottom.
much you think it will sell for. Be realistic. The younger you are, the less secure your career is, and the more your incom
up and down), and the more likely you are to sell within 5 years.

Home Purchase
(this assumes an FHA mortgage)
Estimated New Home Price: $300,000
Down Payment %: 5.00%
Down Payment: $15,000
Mortgage Amount: $285,000
Interest Rate: 3.88%
1.25% FHA Insurance Premium: $3,750
(fee for an FHA mortgage)
Other Closing Costs: $5,000
(closing costs are difficult to estimate, they vary widely by county/city, $5000 is
a good guess)
Money required upfront: $23,750
(you need this much money upfront to buy the house)

Mortgage, other monthly costs

(these costs are how much you'll pay every month)
Principal: $420
Interest: $920
Yearly Property Tax rate: 1%
(varies by county/city)
Property Tax: $250
1.5% PMI: $356 (required for FHA loans where down payment is less than 22%)
Homeowners insurance estimate: $50
Homeowners Association/Condo Fees: $87
Monthly Cost: $2,083

Selling the house

In how many years 5 (be real, how long before you want something bigger, something nicer, etc
Selling price: $320,000 (be real here too, it's not 2004 any more, if the value goes up it won't go u
Closing Costs: $3,000 (difficult to estimate, leave at $3000 unless you know otherwise)
Realtor fees (6%): $19,200 (in case you didn't know it, the buying and selling realtors each take 3% of
Mortgage Owed: $257,251
Total amount left with after sale: $40,549 (how much money you'll have to put in to a second house down payment

Total monthly payments while owning

Total principal paid: $27,749
Total Interest Paid: $52,662
Total other payments: $44,595
Total of monthly payments: $125,006
Tax deductions while owning
(being able to deduct mortgage interest from taxes is often cited as a big reason to buy a home, this will show how much this deduction will actually be wo
think)
Mortgage deductable expenses in a year $18,319 (interest and property taxes)
Other itemized deductions per year $2,500 (hard to estimate here, just guess what your state income taxes are + char
minus standard deduction $5,800 (what you can deduct while renting, if you don't itemize, which you proba
Extra deductions per year from owning: $15,019
Federal Tax Bracket: 25.00% http://www.moneychimp.com/features/tax_brackets.htm
Value of extra deductions per year $3,755

Profit from owning

Home value appreciation: $20,000
Buying and selling fees (closing, realtor, etc): $30,950
Home repair/maintenance while owning house: $8,000 (big guess here, don't underestimate this. This is a total number, not a yea
Total value of tax deductions: $18,773
Total profit: -$177

Some assumptions are made here, like you'd be using an FHA mortgage. There are a lot of complications with these, and
mortgage, so I'm going by what I read here. I believe that FHA monthly PMI is tax deductible so I put in in this category b
Known
incomeProblems with thisit's
is over $100,000 spreadsheet:
not deductible. Also, the deductions assume you're filing singly, if you're married filing join
$11,600.

Disclaimer:
I'm not a financial consultant or in the finance industry. While I've made every attempt to make sure that these numbers
responsible if these calcuations are not correct.
House Or Rent?
ny Americans ask, should I keep renting or buy a home? Buying a home can have financial
o figure out exactly how much these savings are.

save by buying or renting. This only considers the time from now until you would sell the house
at the bottom.
are, the less secure your career is, and the more your income will change from year to year (both
ars.

Monthly Rent: $1,600

Monthly renters insurance: $15
Total cost of renting: $96,900
Monthly payments from owning that you
don't get back: $97,257
(interest, taxes, etc.)
Profit from owning: -$177
Total cost of owning: $97,434

It makes more financial sense to RENT!

You will have saved $534
in 5 years by RENTING instead of owning
If you want to buy a home, see my other spreadsheet template for whether you can
afford the house or not:
https://docs.google.com/spreadsheet/ccc?key=0Al_XAoAHsV3edDFnZ09YMWg5WS1TOEt4U05QUWxmalE

(required for FHA loans where down payment is less than 22%)

(be real, how long before you want something bigger, something nicer, etc.)
(be real here too, it's not 2004 any more, if the value goes up it won't go up by much)
(difficult to estimate, leave at $3000 unless you know otherwise)
(in case you didn't know it, the buying and selling realtors each take 3% of the sale)

(how much money you'll have to put in to a second house down payment)
 n to buy a home, this will show how much this deduction will actually be worth to you. It's probably not as much as what you

(interest and property taxes)

(hard to estimate here, just guess what your state income taxes are + charity)
(what you can deduct while renting, if you don't itemize, which you probably don't)

http://www.moneychimp.com/features/tax_brackets.htm

(big guess here, don't underestimate this. This is a total number, not a yearly amount)

A mortgage. There are a lot of complications with these, and I don't personally have an FHA
A monthly PMI is tax deductible so I put in in this category but I'm not 100% sure, I think if your
ions assume you're filing singly, if you're married filing jointly, increase the standard deduction to

le I've made every attempt to make sure that these numbers are accurate, I can not be held