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Home Ownership Calculator


We have built a simple mortgage calculator for you to compare different loans and to compare buying with renting. Like other calculators that you find on the Internet, we compute the monthly payments, the monthly principle, interest and payoff amounts. However, we have added some extra features to help you decide whether to buy and which loan to choose.

The first feature is adjustable rate speculation. Suppose you are interested in a 5/1 ARM. You can specify your estimated interest rates for years six, seven, etc. You might then find out that if you want to keep the home for more than 8 years, you should finance a 30-year fixed mortgage instead of a 5/1 ARM.

Another feature is expense modeling. Using our calculator you can model tax-deductible and other expenses. You can also model your rent and investment returns if you decide to rent instead of buy. The end result is the "break-even" amount that equals the amount you owe plus the amount you have spent on the home, adjusted for the rent, taxes, investments and expenses. For example, suppose you plan to sell your home after 40 months when the calculated break-even amount is $315,000. At that time your loan carries a prepayment penalty of $5000. You replace the garage door and the roof, and paint the house for the total cost $10,000. If your realtor charges 6% and the transfer tax that you are responsible for is 1.5%, then you should sell your home at

($315,000 + $5,000 + $10,000)/(100% - 6% - 1.5%) = $360,000.

If you think that you will not be able to command such a price for your home at that time, you probably should rent.

The result of our calculator is a spreadsheet that you can use with Microsoft Excel or any other spreadsheet program. You can graph the numbers or perform further calculations. You can reformat the rows, columns and print them anyway you like.

The calculator is on the next page. We also provide additional information on pages 3 and 4 on modeling your expenses accurately and using the calculator for refinancing.

to the calculator

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