This converter requires the use of Javascript enabled and capable browsers. This script calculates the everyday decision of renting or buying a home, based on time and rental or purchase prices. This decision is applicable to young and first time buyers, seniors and the mainstream group between those age groups. There are MANY factors in deciding if home ownership is correct for you at a given time, or if correct for you at all. Is the market appreciating? Is the location what you want? Are interest rates attractive? Do you have a down payment? Is your credit good? Can you afford the repairs if required? Are you committed to the area for at least 5 years? Can you afford the house? Are you in an up home market or a down home market at present? Those are some but there are literally hundreds of deciding factors. Each of those questions (and others) individually is NOT considered THE deciding factor but as a group, the needed decision may or may not be obvious and apparant. Buying a home is not necessarily a start of a growing cash cow; it could be a nightmare as many have discovered. Certain areas of the country (or world) have cyclic down and upturns that can make home buying very risky or certainly untimely. Economies change; mortgage rates and values can fluctuate wildly. Jobs are not certain...
This rule of thumb calculator assumes that you DO have the financial capability to either rent or buy but uses the factor many savings and loans, banks and mortgage companies have used for a guideline since the 1930s. While home ownership is desireable to many; it is not for everyone. You may or may not be able to sell a home you own profitably (or at all) when you desire to change locations or need to make a change for some reason. That age old rule is if the annual rent multiplied by 15 (or the variable factor if you desire to change the default) is less than the price of the home (and there are no obvious negative factors), then buy. Otherwise, rent until factors change or you find the right situation to buy.
While we feel that the multiplication factor of 15 has served well for many years and would have prevented MANY of the situations leading to disasterous foreclosures of the past few years, many real estate agents and brokers, mortgage officers, bankers, lenders and financial officers have asked for a "variable factor" ranging from 12 to 18. We have added that as of 10/13/10 with the default still being 15. You may change the default factor in whole numbers, ranging from 12 to 18 only. Whole number values (integers) of 15 plus or minus 3 are accepted.
Enter the cost of the home (no commas or $) and the monthly rent option (no commas or $). You may leave the variable factor at the default value of 15 or change it to an integer (whole number) between 12 and 18. Click on Calculate. You may also click on Clear Values to clear all the entries and re-calculate. You may also wish to see the detailed version, Detailed Purchase Or Rent A Home Calculator.
