In general a mortgage is a pro, it's going to cost you but in the long run you've got a good chance of breaking even or even profiting. Robert Shiller, the Yal

In general a mortgage is a pro, it's going to cost you but in the long run you've got a good chance of breaking even or even profiting. Robert Shiller, the Yale economist who pretty much invented modern techniques for housing market valuations (the Case-Shiller index), analyzed this question in his book Irrational Exuberance. Based on a centuries worth of housing data, he concluded that the return on investment for housing was very low, on the order of 0.4% per year (you could do worse than read http://realestate.yahoo.com/promo/renting-makes-more-financial-sense-than-homeownership.html http://realestate.yahoo.com/promo/renting-makes-more-financi... ). Look, if the price to rent ratio in your area is suitably small (taking into account property taxes, transaction fees, insurance) AND if you can commit to being in that area for at least 5 years AND if you have either surplus time or money to spend on maintenance and improvements, then switching from renting to owning might be a good idea. The trouble is that buying a house means buying two goods bundled together: an investment and shelter. Homeowners often sink most of their wealth into the investment part. But housing makes an awful investment for most people: transaction costs are enormous, they can't diversify, and market liquidity tends to be very low just when you need to sell. It would be a disaster if people decided to sink most of their wealth into a single undiversified stock, but people do that all the time with housing. Many people end up buying a house even though that decision doesn't make sense because we have a cultural expectation that you're not really a serious adult until you've bought a house. I know my parents bought their house for 75,000GBP and sold it for 250,000GBP in the space of 15 years, because of their mortgage agreement they were paying low rates for the longest of times. Making major financial decisions based on anecdote rather than data often ends poorly. It's worth noting that a $1000 mortgage is a shitload better than $1000 in rent. This is just not true. It depends. If you think you might be moving somewhere else in the next few years to get a better job, than paying rent will probably be much smarter.