When Should You Stop Renting and Buy?

The answer is when it costs less to buy than to rent. But how do you calculate that? If you find two similar houses- one for sale and one for rent- divide the asking price by the annual rent. The difference is called the rent ratio. A rent ratio of 20 or more usually means that is costs considerably more to own than to rent once you include the mortgage, taxes, insurance and maintenance expenses.  It make sense to buy when the rent ratio is much closer to 10. Of course this is purely a financial calculation and there are many more reasons to buy a home, if you qualify, that are related to lifestyle and wealth building that we have discussed in the past. Now is a great time to buy and stop paying your landlord's mortgage payment.