If you’re trying to measure the costs of homeownership versus the cost of renting a home, there’s an official tool to help you. The Federal Reserve Bank of Cleveland released a Rent or Buy Calculator that runs an internal simulation of cost scenarios, for both renting and owning a home, based on the information you put in about your home and mortgage. From the data, it will tell you how much, if at all, you will financially gain from owning a home versus renting. Its an interesting tool, but I’m not convinced it’s comprehensive. I found a home for sale online and used the calculator as if I planned to purchase the house under the terms of a HECM Saver (I know HECM is only for reverse mortgages, but I wanted to see if a .01% down payment would affect my stats :-). I found a gorgeous three bedroom, three bathroom house located in north Dallas and entered my respective information. The calculator told me I had a 95% chance of financially gaining $81,522 from buying a $510,000 home at .01% down payment versus renting a $1,300 property over the same time period. 30-year, fixed rate at 4.09% anyone? But what the calculator doesn’t measure is the golden phrase most mortgage experts are now living by: my ability to pay (or lack thereof). The calculator doesn’t know I am a 22-years-old rambunctious spender that’s living paycheck-to-paycheck. If I hadn’t found the cheapest duplex in Dallas, granted at the expense of a dishwasher and central air, I would probably still be mooching off my parents. So while the Cleveland Fed has produced a useful tool to measure the best potential you have in owning a home, take the disclosure to heart: “This calculator is for informational purposes only. The results should not be interpreted as investment advice.” After all, the only reason I used the calculator was because it’s free. Write to Christine Ricciardi.

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