By the way, just like all investments you can do the math yourself when it comes to Rent vs Buy question.
The cost to rent is your rent. The cost to buy is more complicated.
- First you have some cash for down payment + closing cost. What would the expected rate of return be if you don't put it in real estate?
- Then you have monthly mortgage + tax + insurance. The true cost of owning is interest part of mortgage + tax + insurance, where you get some of it back from federal tax deductible depending on your tax bracket.
- Maintenance expenses.
- Risk of home value going up or down in a few years
- You get $8000 tax credit, which would lower your risk (break even cost when you sell)
- You loose the flexibility as a renter. You are stuck with the house until you sell it. You may have some opportunity cost - say you could get a better job somewhere else, but it doesn't make sense for you to sell the house and move on. Career change / job relocation is something you must also factor in since you are so young and have so much potential.
- The up-side of home owning is you are not relying on how much your landlord think you should pay. Your rent can go up fast. Your landlord could not renew your lease, then you have to move even if you don't want to. Tax doesn't go up that fast. If you go with a fixed rate mortgage, you'll have much better control on your budgeting and stability.
- The down-side of owning is if you have financial difficulties in the future, you'd be screwed like millions of home owners now. If you rent, you could just move to a cheaper crappier place and move on.
You can do the math for cost of owning roughly, but it only goes so far. Personally I think real estate is a good investment vehicle if you can manage the risk (constant cash flow is necessity for mortgage obligation) because tax law favors real estate investment (tax credit on mortgage interest and tax break on capital gains) over other investments (count as regular income).