Compare the total net cost of buying versus renting and find the breakeven year.
Compare total net cost of buying (down payment, mortgage, taxes, maintenance, less appreciation and equity) versus renting (rent, renter's insurance, less opportunity cost) to find the breakeven year.
Buying a $400,000 home with 20% down at 6.8% versus renting a comparable $2,200/month unit often breaks even around year 6–8 depending on appreciation and rent growth.
The year when the cumulative net cost of buying falls below the cumulative cost of renting, after accounting for equity, appreciation, and opportunity cost.
Down payment, mortgage payments, property taxes, insurance, maintenance, and closing costs, offset by equity build-up and home appreciation.
Rent and renter's insurance, plus the opportunity cost of not investing the down payment you would have spent to buy.
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