Rent or buy? The mortgage calculator knows
Mortgage calculator: Best to rent or buy?If you think a mortgage calculator is only good for giving you an estimate of your monthly loan payments, you're missing out on a key feature. A lot of potential homeowners use the tool to determine if they're better off renting or buying.
Can you afford to buy?Owning a home isn't just a matter of being able to make monthly loan payments. You need to know if you're financially stable enough to buy. Accordingly, a mortgage calculator geared toward the rent-versus-buy question will ask you to weigh your savings against any outstanding debt you have.
Factors to considerEven if you have a substantial down payment and can afford the monthly payments on a home, you might still use a mortgage calculator to weigh other factors. For example, you may need to know the financial effects of how long you plan to stay in the house or how much you'll need to pay in property taxes.
Learn the real costsOnce you've used a mortgage calculator to tally up the real costs of buying versus renting, you can make an informed decision. While you might be tempted to choose the less-expensive, short-term option, the real question is affordability. As a rule, it's a good idea to make sure the total cost of your monthly mortgage payment is less than 31 percent of your income before taxes.
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