Buy v. Rent: Ask The Calculator
By: BankingMyWay.com Staff

By BankingMyWay Staff

You're finally considering getting into the housing market, but you're not sure. You love your rent stabilized apartment, and haven't quite been able to figure out which makes more sense financially. BankingMyWay's calculators to the rescue!

Buying a house is a difficult decision, and the question abound. Do you have enough cash for a down payment? Can you get a mortgage? Does owning a house fit with your long-term plans? But with a little research -- and some help from an online calculator from BankingMyWay.com -- making that decision can be a lot easier.

Housing Market
Homes are currently very affordable, but prices are still falling -- home prices posted record declines in the fourth quarter of 2008. It can be tough deciding to buy a house when you think it might be worth less just a few months from now, but many local markets haven't done as poorly as the national trends might suggest. Talk to a local real estate agent to find out where things stand in your area. To find a reliable agent, ask for recommendations from friends and family, or head to the National Association of Realtors' website.

Financial Situation
A good real estate agent can tell you how the local market is faring. But don’t wait to buy until the market has hit rock bottom. Reason: It's next to impossible to successfully time the market, and you may end up missing out on the best deals. Your best bet is to buy a home when it makes sense for you.

To help figure out if buying a house is a smart move, check out BankingMyWay.com's Buy versus Rent calculator. Enter the relevant information, such as the price you are considering for a new home, the details of the mortgage you'd qualify for and what you'd need to pay for a rental in your area. A few key assumptions you'll have to enter include the expected rate of appreciation for your home's value, an estimate for the rate of inflation (3.1% is a suitable long-term average) and an estimate for your average annual rate of return for your investments (8% is a typical estimate). The calculator compares the financial outcome of buying a home with that of renting. And since buying is typically the better choice in the long run, the calculator provides an answer in the form of the number of years you'd have to live in a home for buying to have been the right decision.

Mortgage
Part of your decision to buy a home depends on how long you plan on staying in one place. But another important factor is whether you qualify for a mortgage and what interest rate your lender offers. Head to BankingMyWay's mortgage page and enter your ZIP code. There you'll see rate offers from national banks, such as JPMorgan Chase (Stock Quote: JPM) and Wells Fargo (Stock Quote: WFC), as well as smaller, regional banks such as Carolina Trust Bank (Stock Quote: CART) and Sovereign Bank (Stock Quote: SOV). With a better idea of what your mortgage might look like, head back and revisit the number in the calculator to make sure your decision still makes sense.

—For more ways to save, spend, invest and borrow, visit MainStreet.com.

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