Most economists say the rent to buy ratio should be 1:1 or 1:1.5 times. In other words, if it costs $1000 to rent then it should cost no more than $1500 to buy to be a good idea. It may be a bad idea right now in Nevada but our area, New York/New Jersey is either AT that price point or very, very close. Fortune magazine, this week, said NOW is the time to buy real estate and just yesterday on CNN I saw a financial analyst recommend real estate as an investment so strongly it amazed me.
Talk to a loan officer, you may not need a huge down payment, FHA requries 3.5% only. Then do the math. I am working with a couple right now who are purchasing a two bedroom house. Their mortgage payment (with a sizeable down payment, but that is a choice) is going to be around $1200 for principal and interest. To rent the same house would cost around $1600 - $1700 per month, which means in this case it is cheaper to buy than to rent.
It is very wise to look at purchasing a home as a business decision. You are to be congratulated for that! Now, go do your research and then do the math. And by all means let us know what you find!... more