Renting vs. Buying: How to Run the Real Numbers
The rent-versus-buy decision often gets reduced to comparing a current rent payment against an estimated mortgage payment, but that comparison leaves out enough real factors that it can point to the wrong conclusion. A more complete comparison accounts for time horizon, opportunity cost, and costs on both sides that are easy to overlook. Why monthly payment alone is misleading A mortgage payment includes building equity (the principal portion) alongside interest, taxes, and insurance — some of that payment is effectively forced savings, unlike a rent payment, none of which builds ownership. At the same time, a mortgage payment doesn't include maintenance, repairs, or the opportunity cost of the down payment, all of which a straight monthly comparison ignores. The time horizon matters more than almost anything else Buying involves significant upfront transaction costs (closing costs on the way in, and typically agent commissions and other costs on the way out if selling). Th...