The 5-Year Rule
Buying a house involves high upfront costs: down payments, closing costs, and moving expenses. Because of this, renting is almost always cheaper in the short term.
The Rule: If you plan to stay in your home for less than 5 years, you should probably rent. It typically takes 5–7 years for appreciation and principal paydown to offset the initial cost of buying.
The Hidden Wealth of Homeownership
While the monthly payment for buying might be higher than rent initially, it offers two major financial advantages:
- Equity Buildup: A portion of every mortgage payment goes into your own pocket (as equity), whereas rent is 100% expense.
- Fixed Costs: A 30-year fixed mortgage locks in your housing payment for decades. Rent, on average, increases by 3-5% every single year.