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Rent vs. Buy
Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. This calculator helps you work through the fees, taxes, and monthly payments to help you make a good financial decision.

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Definitions
Price of homeThe purchase price of the home you wish to buy.
Cash on handThe cash you have for the downpayment and closing costs.
Interest rateThe current interest rate you can receive on your mortgage.
Term in yearsThe number of years over which you will repay this loan.
Property tax rateAn estimate of the property tax rate. Estimate the annual real estate taxes as a percentage of the home’s value. For example, entering 1% for a home valued at $100,000 equals $1,000 per year in property taxes.
Home insurance rateAlso known as your homeowner's insurance rate. Estimate the home insurance as a percentage of the home’s value. For example, entering 0.3% for a $100,000 home equals $300 per year for homeowner's insurance.
Loan origination rateThis is the percentage of the new mortgage amount that is paid to the lender as the loan origination fee.
Points paid:The total number of points paid to reduce the interest rate of your mortgage. Each point costs 1% of your mortgage balance.
Other closing costsThe estimate of all other closing costs for this loan. This should include filing fees, appraisal fees and any other miscellaneous fees paid.
Total closing costsThe total up-front costs to close your loan. This is the sum of the loan origination fee, amount paid for points and other closing costs.
Total for downpaymentThe total funds remaining for downpayment.
Loan amountThe total amount of loan.
Investment returnThe annual percentage return you would receive if you invested your closing costs and downpayment instead of purchasing a home.
Monthly rent paymentThe amount you currently pay for rent per month.
Income tax rateAn estimate of your current income tax rate. Use the chart below to estimate based on your Federal 2013 taxable income. Information about estimating your state tax rate can be found at http://www.taxadmin.org/fta/rate/ind_inc.pdf.

Filing Status and Income Tax Rates 2013
Tax rate Married filing jointly or Qualified Widow(er) Single Head of household Married filing separately
10% $0 - 17,850 $0 - 8,925 $0 - $12,750 $0 - 8,925
15% $17,850 - 72,500 $8,925 - 36,250 $12,750 - 48,600 $8,925 - 36,250
25% $72,500 - 146,400 $36,250 - 87,850 $48,600 - 125,450 $36,250 - 73,200
28% $146,400 - 223,050 $87,850 - 183,250 $125,450 - 203,150 $73,200 - 111,525
33% $223,050 - 398,350 $183,250 - 398,350 $203,150 - 398,350 $111,525 - 199,175
35% $398,350 - 450,000 $398,350 - 400,000 $398,350 - 425,000 $199,175 - 225,000
39.6% over $450,000 over $400,000 over $425,000 over $225,000

Expected inflation rateThe inflation rate used to adjust amounts subject to annual increases. This includes rent, insurance and tax payments.
Home appreciates atThe annual appreciation you expect in the home you are purchasing.
Home sales commissionThe percent of your home's selling price you expect to pay to a broker or real estate agent when you sell your home.
House paymentThe total of principal, interest, taxes and insurance paid per month for your home. Insurance includes mortgage insurance and homeowners insurance.
Principal paymentThe total of principal paid per month on your mortgage.
Tax savingsThe value of the tax deduction you receive on your mortgage interest and property taxes. For example, if you have $900 in interest and $100 property taxes per month, the value of the tax deduction would be $250. (At a tax rate of 25%)
Net house paymentYour house payment minus the value of the tax deduction and principal payment.
Net home priceThe net selling price of your home after subtracting any sales commissions.
Monthly PIYour monthly principal and interest payment.
Monthly PMIThe monthly cost of private mortgage insurance (PMI). For loans secured with less than 20% down, PMI is estimated at 0.9% of your loan balance each year. Monthly PMI is calculated by multiplying your starting loan balance by this percent and dividing by 12. When your loan balance exceeds 22% of the original purchase price, your PMI payment drops to zero.

This calculator is for illustrative purposes only. The information shown is designed to provide basic information about mortgage financing. Please consult with your tax advisor to determine the tax impact of home ownership and interest deductibility for your individual circumstances.


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