Should I rent or buy?
The instinct that renting is throwing money away treats a mortgage payment as savings. Most of an early mortgage payment is interest, and buying carries costs renting never does — maintenance, property tax, insurance, and the transaction costs on both ends. The real comparison is net worth after N years under each path.
Renting at $2,200/month versus buying a $450,000 home, over 10 years:
Buying comes out ahead. Buy net worth $299,568 vs rent net worth $281,725. Break-even: year 7.
Renting wins when
- You may move within about five years — transaction costs alone can exceed several years of equity
- The gap between rent and total ownership cost is large, and you actually invest the difference
- Prices in your market are high relative to rents, so the same home costs far more to own than to rent
- You need flexibility, or your income is uncertain
Buying wins when
- You will stay long enough to get past the break-even year
- Your monthly ownership cost is close to comparable rent
- You value a fixed housing cost — a fixed-rate mortgage is inflation protection rent does not offer
- You would not reliably invest the difference if you rented
The bottom line
Find your break-even year, then ask honestly how long you plan to stay. If your answer is shorter than the break-even, renting is very likely the better financial choice — regardless of how the housing market feels at the moment.
Run it with your numbers