Oh, man, some of the online calculators that promise to help you decide whether to rent or buy a home are wicked misleading!

I just plugged in our numbers, and one calculator made so many assumptive and factual errors it was scary. I now feel the need to blog a public service announcement. Stand back. This may be messy.

First of all, though my rent would be less than my mortgage, the calculator assumed I would spend the difference rather than save it. Don’t they know I watch Suze Orman? Big problem for the bottom line, that assumption. And there was no way to change it.

Second, the calculator assumed that every penny paid to the mortgage would come off the principle. I asked for a calculation on four years of renting versus buying. The calculator said that I would shave at least a third of the balance of the loan in that time. With what loan? Is someone now offering principle-only loans? ‘Cuz I’ get one of them, no question. In the first four years of a mortgage, we’ll be lucky if 15% of our payment goes to principle. Using the faulty numbers, the calculator had my savings account ten times bigger than it really would be after four years of owning a new mortgage. That’s 1000% off. Slight problem, no?

Third, the calculator neglected to take closing costs for the purchase and sale, or realtor costs out of the alleged profit I’d make after four years of ownership (which is really bank ownership and my borrowship).

Did I just find a bad rent vs. buy calculator? Maybe. This one seems pretty good because it asks a lot more questions and involves a lot more financial nuances. I think the mortgage and realtor web sites that have these calculators have more than a little at stake in convincing us that home ownership is an “always””, rather than a “sometimes” wise decision.

Deciding whether to buy a really small, 8 trillion dollar Berkeley house that we won’t keep for more than 4 years, I found this site about homeownership myths useful. (Yes, it’s flawed, especially in not articulating why its title exists, but the financial blogosphere seems very threatened by its overall points. I won’t link to their nonsense. Geez. If someone arguing that renting is sometimes okay threatens your whole raison d’etre, get a therapist.) Even today, my SoCal realtor told me the interest write-off is a good reason to buy. Um, you don’t get the interest as a refund. It comes off our pre-tax income and therefore gets us about 15% of our interest payment back. Call me jaded, after selling in a down market, but I don’t always think buying is the best answer. Do the math yourself. Don’t use an online calculator. (And if you do, find a good one.)

(And don’t buy from liars who don’t disclose material facts that will keep you from selling at a fair price later. Seriously. But that’s a whole ‘nother entry.)