Savings

• "The New York Times" recently analyzed the sale and rental market in the largest American cities and found that in some cities where home sale prices haven't dropped after the housing bubble burst, monthly rent was lower than mortgage payments for similar properties. At the beginning of a typical mortgage, only a small amount of your monthly payment goes toward paying down your original loan or principal, with most of the payment going toward interest. Although the share that goes toward principal increases over time and your mortgage interest is tax deductible, arguably, those interest payments aren't saved or invested.
  
  

Liquidity

• Liquidity means your money is more readily available to invest in potentially more profitable and diverse investments when not tied up in your home. As a renter, you have access to the money you would otherwise put into a down payment, the difference between your mortgage payment and what you would be paying in rent for a similar house and all of the costs you have as an owner that you don't as a renter.
  
  

Avoiding Risks

• With housing prices in markets such as Las Vegas losing as much as 5 percent year over year from early 2007 to July 2010, many buyers who risk paying more for their house than it might be worth next year purchase with the intention of waiting until prices recover in a few years. If you're more risk averse, renting might let you wait until housing prices have bottomed out.
  
  

Flexibility

• Renting also makes sense if you need your housing to be flexible to your work or lifestyle. If you don't plan on staying in your home that long or your job is less than stable, buying only to sell quickly might not be a good idea. Selling soon after buying would leave little time for your home to appreciate enough to cover the costs of selling your home and the mortgage interest payments.
  
  

Mortgage Versus Rent Ratio

• "The New York Times" and Moody's Economy analyzed renting versus owning by dividing the price of a house for sale by the annual rent for a similar house in several large housing markets. Assuming an interest rate of 5.25 percent and a 2 percent increase in rent and home values, they found that a ratio well below 20 usually meant that rent would be lower than monthly mortgage payments. They've also created a nifty, more precise interactive graphic where you can enter your rent, down payment, mortgage rates and the percentage change in rent and home prices to see if renting is cheaper than buying.