Does it makes more financial sense to buy or rent your home? As you’ve probably figured out, answering this question can be complicated. There are a host of factors to consider, including interest rates, taxes, expected appreciation and insurance.
Here are five great online resources that can help making the decision easier.
Often owning makes financial sense in the long-term but renting makes sense in the short-term. That sounds simple enough, but what exactly qualifies as “long-term” and “short-term”? This excellent tool helps you visualize exactly when that is. The basic inputs are pretty simple, so if you want a more accurate date you may want to try playing around with some of the advanced settings.
The great thing about this calculator from Yahoo is that it clearly tells you how much money you’ll save buying vs. renting (or vice versa). The downside? You’ll have to dig up a lot of information to make it work properly. When you first land on the page it can look daunting, but if you spend some time figuring out things like your expected interest rates and insurance premiums it can be an excellent resource.
Often the answer to the “buy vs rent?” question depends on current conditions. Are home prices high? Are they increasing or dropping? Are rents on an upward or downward trend? Zillow has some great tools to help you answer these questions. In particular, check out the Home Value Index and Rent Index. One thing to keep in mind: the data Zillow uses isn’t a full picture of the housing market, so use the indexes to get a general sense of trends rather than for firm values.
To get an idea of how the housing market is doing overall, check out this blog from Trulia. It’s devoted to examining rent vs buy trends and includes lots of insightful analysis. Most of the information covers the national outlook, but they also dive in on occasion to look at how local areas are performing against each other.
The buy vs. rent decision is often more complicated for retirees since there may be additional factors to consider (like estate value or capital gains from a previous home). This article from Baby Boomer Lifeboat is a bit outdated, but it still does a good job of laying out the risks/benefits of buying and renting for retirees.
Photo by ljguitar via Flickr.