For many, this almost seemed like a silly question until a few years ago. It was generally assumed that if you were in a position to buy, you should do so. Renting was often regarded as “throwing your money away.” These days, however, in some areas of the country at least, it makes more sense to take out a lease and some renters insurance and settle in to an apartment or rented house, at least until the housing market shows some signs of recovery.

While many experts will give vastly different criteria on whether it is better to rent or buy in a particular area, a good rule of thumb is that it is better to buy a home in an area if you can get it for less than what it would cost you to rent there for 15 years. To determine this, simply multiply your monthly rent times 180 months. If you can buy a good house in your area cheaper than that, buying might be a good idea.

Of course, there is no formula that can definitively tell you what you should do for your unique situation. There are perfectly good reasons to rent instead of buying, many of which have absolutely nothing to do with dollars and cents. If you anticipate moving around a lot, a lease is much quicker and easier to get out of than a mortgage. And some people don’t like the full time responsibility of maintaining a home, mowing the grass, etc.

There are additional financial benefits to renting over buying as well. Typically, in an apartment or townhouse, many peripheral expenses are lower. Renters insurance is generally much cheaper than homeowner’s insurance. Utilities are often less as well. Even in similarly sized units, an apartment may use less energy by virtue of being sandwiched between other apartments.

Ultimately, the choice to rent or buy is a personal one, and there are plenty of arguments for both sides. You have to decide what aspects of renting and buying are important to you. You are the one who will have to live in the house or apartment, so whether you want to commit to a 30 year mortgage or a 12 month lease is entirely up to you.

Photo via DeepBluC