I ran across this great Buy vs Rent tool that the New York Times unveiled.  This is a comprehensive Buy vs Rent tool that allows you to control many variables like the amount of appreciation, rental increases, inflation, etc…  Comparing a mortgage payment to a rental payment alone is not a fair comparison.  There are many variables that need to be considered.  You can also use the simple Buy vs Rent calculator at the end of this article.

One big advantage that buying has over renting is the tax benefits are available to you.  The two items that are tax deductible are real estate taxes and interest payments.  Current tax codes allow both to be tax deductible allowing the cost of each to be taken right of the top of your income.  That means if your property tax is $2400 a year and your interest payment are $8400 a year and your paying about 20% of your income in taxes this works out to a benefit of about $180 a month.

I wrote a similar article to this a couple of years ago Rent vs Buy- Should I Buy a Home?  In this article I give a case study of a condominium in Tewksbury.  It shows the breakdown of what it would cost for each.  Condominiums are a good comparison because I can find to very similar units and compare apples to apples.

Visit the Buy vs Rent Tool

So I am going to run through a few condos in Haverhill, Massachusetts for this article.  I have picked complexes that have units for sale as well as rent to give a  good comparison.  for comparisons I have used very conservative numbers.  I have calculated interest rate at 5.25% home appreciation at 1.5% a year, rental increases at .5% a year and PMI at .8% a year.  These assumptions are extremely conservative.

Comparison 1-  440 North Avenue, Haverhill MA

Purchasing at $94,900 with 3% down and a mortgage payment that includes principal, interest, private mortgage insurance and a monthly condo fee would cost you approx. $976 a month versus a monthly rent of $1200.  The calculator shows you would have to find a rent of under $905 a month to break even on buy vs rent.  At the end of 5 years you will be approx. $24,000 ahead of the game by buying after 5 years.

Comparison 2- Farrwood Drive Haverhill MA

Purchasing at $174,900 with 3% down and a mortgage payment that includes principal, interest, private mortgage insurance and a monthly condo fee would cost you approx. $1440 a month versus a monthly rent of $1400.  The calculator shows you would have to find a rent of under $1325 a month to break even on buy vs rent.  At the end of 5 years you will be approx. $$18,380 a month ahead of the game by buying after 5 years.   While the monthly payment is $40 a month higher the long term benefit over 5 years indicates that financially it is cheaper for you to own then rent.

Looking for affordable condos in Haverhill?  View all the Haverhill Condominiums for Sale