If you will only be in your next home for two (or 1, 3, 4 or 5) years -- should you buy that home?  Or just rent a home instead?

Let's take a look, assuming a price point in the current market of around $175K - which is likely to be a townhouse and might be what you are considering as a first time buyer...

As becomes pretty quickly, above, it doesn't necessarily make much sense to buy if you are only going to be in your home for 1 or 2 years -- and once you get to a time horizon of 4 or more years, it almost certainly makes sense to buy a home.

For clarity, let's look at how I'm determining the cost of renting and buying this fictional house...

Monthly rental rate  x  12  x   # years

Yep, that's it

As you can see, I am intending for this to be a full accounting of the total costs of home ownership -- not just comparing the rental payment to the mortgage payment.

Here's a visual (click for a closer look) as to how those numbers line up over a one through five year time horizon...

I should also note that it is quite possible to be "just fine" from a financial perspective if you buy and only end up being in the home for a year or two if...