Rent or Buy House?

This caller is trying to figure out whether to buy or rent.

QUESTION: Jody and her husband are renting a house for $1,350 a month.  Her husband is with the military.  Should they try to buy a house where they’re living now for about $235,000 at 5.5% on a 30-year mortgage? 

ANSWER: You’re always better off to buy a home if it’s a reasonable expense in your budget and if you’re going to own it for at least five years.  If you’re going to buy a home, you need to pay 100% cash or put 20% down and get a 15-year fixed rate mortgage.  Your monthly payments should also be no more than 1/4 of your take home pay.

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