Comparing the financial difference between renting vs. buying is not easy. I've looked at various "comparison calculators" and the one that I feel is the most impartial is one provided by Ginnie Mae, a government organization.
The calculator on their website requires minimal information but it provides a realistic estimate. The information the calculator requires is listed below along with recommendations if you don't know the answer to some of the questions. Please note that this calculator does NOT take into account the single biggest advantage of home ownership after appreciation: tax savings. You can generally deduct all taxes and interest paid on a home mortgage from your taxable income thus reducing your taxable income. This is a huge advantage of home ownership and is alone usually sufficient to justify purchasing a home as opposed to renting.
You are asked a few questions with the Gennie Mae Calculator. Here are the questions (other than price, etc.) and my suggested answers.
| Calculator Question | Suggested Answer |
| Percentage of Down Payment: | Enter 0% down unless you are rolling over proceeds from a prior home. |
| Length of Loan Term (years): | Most mortgages are for 30 years. |
| Interest Rate: | Use 5% or even 5.5%. However, today you can readily get 4.5% money if you know where to go. |
| Years You Plan to Stay in This Home: | The national average is about 5 years. |
| Yearly Property Tax Rate: | Use the default 1% to be conservative. |
| Yearly Home Value Increase Rate: | Property prices have leveled out and are starting to slowly rise. I suggest 3% as a reasonable appreciation. |
Ginnie Mae Rent vs Buy Calculator
Choosing the right loan is as important as choosing the right home. Part of the value I bring is connecting you with good lenders and negotiating the rate and terms.
Contact me if you are considering buying or selling Las Vegas real estate. You will be glad you did.
...Eric
Eric Fernwood
RE/MAX CENTRAL
8400 W. Sahara Ave
Las Vegas NV 89117
Email: EricFernwood@gmail.com
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