This system is used for practicing present value calculations in the UIC FIN500 course.
A very important factor, but not the only one. Our estimate will improve as you enter more details below.
Setting a target rent allows for a direct comparison of potential costs.
Buying tends to be more appealing the longer you stay because the upfront fees are spread over many years.
The calculator assumes you have a fixed-rate mortgage. It also calculates your main opportunity cost of buying — the amount you could have earned by investing the down payment instead — and checks whether you can take advantage of the mortgage-interest tax deduction.
How much home prices, rents and stock prices change can have a large impact on your outcome. Unfortunately, these are some of the hardest things to predict and can vary significantly across the country.
Property taxes and mortgage-interest costs are significant but also deductible. The higher your marginal tax rate, the bigger the deduction. But if your house-related deductions are smaller than the standard deduction, you won’t see any relative tax benefit from buying.Note that the calculator assumes savings in line with current tax laws: The 2017 Tax Cuts and Jobs Act increased the standard deduction, while reducing the maximum deductions on property taxes (part of what’s known as the SALT deduction) and mortgage interest. These provisions are set to expire in 2025, but could be renewed or modified by Congress.
You’ll have to pay a set of one-time fees when you buy your home, and also when you sell it.
