Fontenot MortgageOdette Fontenot · Mortgage broker
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The maths

Odette

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Buying

Over how long does buying win?

Buying wins eventually and loses if you move too soon. The only honest version of this calculation shows you the year it turns over, and lets you disagree with every assumption behind it.

Illustrative only. Every figure is computed in your browser from what you type. Nothing here is a quote, an offer of credit, an APR or a rate lock, and no result is stored or sent anywhere.

Buying

15%
7.25%
0.75%
1%

Of value per year. On older housing stock this is the assumption most often set too low.

3%
7%

Renting

3.5%
5%

The renter invests the down payment and any monthly difference. Leaving this at zero is the assumption that makes buying look best.

15

Buying overtakes renting in

—

Net cost of buying
$0
Net cost of renting
$0
Equity at the end
$0
Home value at the end
$0

Read the crossover, not the total

Net position, year by year

BuyingRenting

Lower is better on both lines. Buying starts higher because of the down payment and the cost of selling, and falls as the loan is paid down and the property appreciates.

What this model does and does not do.

  • It ignores the mortgage interest deduction, which is worth nothing to most people who take the standard deduction and a great deal to a few who do not.
  • It assumes you sell at the end of the period and pay the selling cost. If you never sell, the crossover comes sooner.
  • Mortgage insurance is not modelled, so a low down payment is flattered here.
  • It cannot price the things that actually decide this — whether you want to stay, whether you want to fix the roof, whether a landlord can end your lease. Those belong in the decision and not in a chart.

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—The other seven

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