This page will serve as the main page for the Rent vs Buy Calculator for any future update or user questions. For the most part, you shouldn’t need to read anything from this page, until you get into some very minor details.
- The following 3 input boxes are co-dependent: Down payment, Down payment %, Loan amount. Down payment + Loan amount always equals to House price.
- Marginal fed+state tax bracket is used to calculate the after-tax return from the before tax investing return rate.
- You should get your Tax benefit average rate on property tax+interest from my tax calculator, plus any additional tax benefits from the state taxes. The input percentage should be calculated as total tax benefits divided by total amount of the sum of property tax and mortgage interests.
- All the numbers in the yearly comparison table are ACCUMULATED to that particular year, except Deductibles and House Value columns.
- The numbers in every column gets increased year after year, using the after-tax investing return whenever applies.
- The last 5 input fields: Property tax rate, Other property-related tax, Home insurance per Year, Home owner association due per Month, Commute cost difference per Week, will go into the calculation of Other cost column in the yearly comparison table.
- You need to use screen capture tools such as SnagIt to print anything for now.
- Save/Load buttons don’t work (yet).
- If you use TAB key to goto the next input box, the input field gets changed but the yearly comparison table will not get updated because of the change. You should press ENTER key once in a while to get the table updated with the latest inputs.
- You cannot switch between case 1 and case 2 yet, for the yearly table below. Currently, the table always calculates using the information from case 1.
- At the end when the mortgage is paid off, the calculator currently has a slight error if the last remaining balance is not exactly zero. It’s not zero because the mortgage payment is always rounded UP to the nearest cent. This error is bigger if you put in a non-integer number of years of the loan term.
- A constant tax benefit average rate is assumed throughout the life of the mortgage. In reality, this is not true. Most likely your tax benefit rate will keep decreasing and hit 0% once your itemized deduction is not greater than your standard deduction (which gets indexed to inflation). Because of this error, the final result is biased towards benefiting the case for Buying.