BUY WITH A PLAN
Compare home equity with renting and saving or investing the difference.
YOUR YEAR BY YEAR PICTURE
Both paths start with the same $50,000. The buyer uses it for the down payment and purchase costs. The renter keeps it. Each month, the path with the lower housing cost puts the difference aside.
Every dollar figure below uses your inputs and a 3% assumed return on money put aside. Home values and returns can fall. These are examples, not predictions.
Higher means more money in this example. Buying includes selling the home and paying off the loan.
Year 10: Renting is ahead by $4,841.This compares money you could have at that point. It does not tell you which home or lifestyle is right for you.
$200,119
Money you could have after selling
Monthly housing in year 10$3,809
Cash spent on housing so far$486,484
$204,959
Money you could have in your account
Monthly housing in year 10$3,027
Cash spent on housing so far$319,154
Do not subtract housing costs again. Those payments already affect how much each path can put aside. The buying total assumes a sale. Home equity is not spendable cash while you still own the home. A negative sale amount means more cash would be needed to sell.
Read across each row. Compare the red buying amount with the blue renting amount. The last column says which is higher and by how much. Select a year to see its breakdown above.
| YearYears from now | BuyingEquity after selling + money put aside | RentingMoney kept + money put aside + growth or loss | The differenceWhich amount is higher in this example? |
|---|---|---|---|
| Buying$31,304 | Renting$65,596 | Renting is ahead by $34,292 | |
| Buying$47,216 | Renting$81,208 | Renting is ahead by $33,992 | |
| Buying$63,763 | Renting$96,823 | Renting is ahead by $33,060 | |
| Buying$80,977 | Renting$112,429 | Renting is ahead by $31,452 | |
| Buying$98,888 | Renting$128,009 | Renting is ahead by $29,121 | |
| Buying$117,528 | Renting$143,549 | Renting is ahead by $26,020 | |
| Buying$136,934 | Renting$159,032 | Renting is ahead by $22,098 | |
| Buying$157,142 | Renting$174,440 | Renting is ahead by $17,299 | |
| Buying$178,189 | Renting$189,756 | Renting is ahead by $11,566 | |
| Buying$200,119 | Renting$204,959 | Renting is ahead by $4,841 |
Renting stays equal to or above buying at every year end in this example. Different assumptions can change the result. There is no guaranteed break even year.
The renter invests the down payment and purchase costs from day one. Each month the lower cost path invests the difference, so both paths use the same overall budget. Buying includes amortization, editable carrying costs and estimated selling costs. Returns and appreciation are hypothetical and may be negative. Mortgage insurance is held constant until payoff. HOA is held constant. Taxes on gains, deductions, deposit costs, investment fees, inflation and transaction timing differences are excluded. A positive modeled advantage is not a recommendation to buy.
Monthly housing is the average for that year. Cash spent so far includes housing bills, plus the buyer’s starting cash. It excludes money put aside and the final selling costs, which are deducted from home value separately. Account growth is applied monthly, with new money added at month end. Try a shorter stay, no home price growth or a lower investment return to see how the result changes.
A payment you can live with and cash for surprises matter too.
YOUR NEXT STEP
Which numbers fit your life? Eric can help you look at the payment, the cash you keep and what could change next.
Send Eric a request to help arrange a Discovery Call. No application is needed. Your calculator remains free to use.
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