To understand the rent vs. buy decision, analyze your personal situation. The first variable is your current rent. The decision to buy rests on the advantages accumulated beyond the term of your lease. You should estimate the annual rent increases that you will have to pay if you rent longer than one year. Then factor in your renter's insurance. While renter's insurance is on contents, this amount will offset some of the insurance that you will pay as a homeowner. Normally utility costs are not factored in unless you are in a unit where the landlord pays all or some of your utility bills.

When calculating the buy side of the decision, factor in the purchase price. You should calculate an appreciation rate for the property based on a percentage of the purchase price. This will have to be an estimate because it is a future event. Consider also the savings rate that your down payment would earn if you continued to rent and left this money in savings.

Estimate the number of years you expect to own the property. This figure will be personal. If you are starting your career or are in a job where you expect advancement, then it is likely that you will sell the property sooner than later. Typical reasons for selling include changes in marital status or family size, anticipated job transfer, and upward or downward employment growth.

Consider the yearly expenses in owning a home. You will need the interest rate and term of the mortgage, annual property taxes, and estimated annual maintenance. An older home will require more maintenance than a newer one. Finally, the loan expenses when you purchase, and homeowner's insurance and selling costs when you finally liquidate the property are factored in.

To calculate the financial advantages of buying vs. renting, go to www.FinanCenter.com and click on Home Center.