Rent or Buy?

Cumulative Costs of Renting and Buying
Rent
Buy
$ 745,225 $ 380,045
Over the term of your 30-year evaluation period, you will save $365,180 by buying instead of renting
Advantage of Buying over Renting
YearAdvantage of Buying
1$ 8,970
2$ 9,192
3$ 9,416
4$ 9,640
5$ 9,865
6$ 10,092
7$ 10,318
8$ 10,546
9$ 10,773
10$ 11,001
11$ 11,228
12$ 11,455
13$ 11,682
14$ 11,907
15$ 12,132
16$ 12,355
17$ 12,576
18$ 12,794
19$ 13,011
20$ 13,224
21$ 13,434
22$ 13,640
23$ 13,842
24$ 14,040
25$ 14,232
26$ 14,418
27$ 14,598
28$ 14,771
29$ 14,936
30$ 15,092
Yearly Analysis
YearCost of RentingMortgage CostsHomeowner CostsCost of EquityTax SavingsAppreciationCost of Buying
1$ 18,500$ 15,285$ 5,050$ 240$ 3,545$ 7,500$ 9,530
2$ 18,860$ 15,285$ 5,176$ 410$ 3,515$ 7,688$ 9,668
3$ 19,227$ 15,285$ 5,306$ 585$ 3,484$ 7,880$ 9,812
4$ 19,602$ 15,285$ 5,438$ 766$ 3,451$ 8,077$ 9,962
5$ 19,984$ 15,285$ 5,574$ 953$ 3,415$ 8,279$ 10,118
6$ 20,373$ 15,285$ 5,714$ 1,146$ 3,377$ 8,486$ 10,282
7$ 20,771$ 15,285$ 5,856$ 1,346$ 3,337$ 8,698$ 10,452
8$ 21,176$ 15,285$ 6,003$ 1,553$ 3,295$ 8,915$ 10,631
9$ 21,590$ 15,285$ 6,153$ 1,767$ 3,250$ 9,138$ 10,817
10$ 22,012$ 15,285$ 6,307$ 1,988$ 3,202$ 9,366$ 11,011
11$ 22,442$ 15,285$ 6,464$ 2,216$ 3,152$ 9,601$ 11,214
12$ 22,881$ 15,285$ 6,626$ 2,453$ 3,098$ 9,841$ 11,425
13$ 23,328$ 15,285$ 6,792$ 2,698$ 3,041$ 10,087$ 11,646
14$ 23,785$ 15,285$ 6,961$ 2,951$ 2,981$ 10,339$ 11,878
15$ 24,251$ 15,285$ 7,136$ 3,213$ 2,917$ 10,597$ 12,119
16$ 24,726$ 15,285$ 7,314$ 3,484$ 2,850$ 10,862$ 12,371
17$ 25,210$ 15,285$ 7,497$ 3,765$ 2,778$ 11,134$ 12,635
18$ 25,704$ 15,285$ 7,684$ 4,056$ 2,703$ 11,412$ 12,910
19$ 26,208$ 15,285$ 7,876$ 4,357$ 2,623$ 11,697$ 13,198
20$ 26,723$ 15,285$ 8,073$ 4,668$ 2,538$ 11,990$ 13,498
21$ 27,247$ 15,285$ 8,275$ 4,991$ 2,449$ 12,290$ 13,813
22$ 27,782$ 15,285$ 8,482$ 5,326$ 2,354$ 12,597$ 14,142
23$ 28,328$ 15,285$ 8,694$ 5,672$ 2,254$ 12,912$ 14,485
24$ 28,884$ 15,285$ 8,911$ 6,032$ 2,149$ 13,235$ 14,844
25$ 29,452$ 15,285$ 9,134$ 6,404$ 2,037$ 13,565$ 15,220
26$ 30,031$ 15,285$ 9,362$ 6,790$ 1,919$ 13,905$ 15,613
27$ 30,622$ 15,285$ 9,596$ 7,190$ 1,795$ 14,252$ 16,024
28$ 31,224$ 15,285$ 9,836$ 7,604$ 1,664$ 14,609$ 16,453
29$ 31,838$ 15,285$ 10,082$ 8,034$ 1,525$ 14,974$ 16,903
30$ 32,465$ 15,285$ 10,334$ 8,480$ 1,379$ 15,348$ 17,373

Depending on how fast prices and rents rise and how long you stay in your home, you may be better off renting rather than buying. Factors that are part of the equation are the difference in monthly rent versus mortgage payment, home value appreciation, annual rent increases, the interest rate you will pay on your loan, your marginal tax rate and the yield you might receive on savings. When looking at these factors, consider the present value of each option. The one with the lower present value will be the better financial choice.