The buy vs rent decision at current rates comes down to comparing your monthly mortgage payment to your rent, then factoring in equity building, tax benefits, and stability. If your mortgage payment is close to or less than rent, buying usually wins. If the mortgage payment is significantly higher, renting may make more sense in the short term.
A break-even analysis helps. Calculate how many years you need to stay in the home for the equity and appreciation to offset the upfront costs of buying. If you plan to stay longer than the break-even period, buying is typically better even at higher rates.
Do not forget that rent increases over time while a fixed-rate mortgage payment stays the same. What looks expensive today may look cheap in 5 years.
Patrick's Take
I have run this calculation for hundreds of clients. In many San Antonio neighborhoods, buying at 6.5% is still cheaper than renting a comparable home when you factor in rent increases over 5-7 years. Rent goes up every year. Your mortgage payment stays the same. Plus you build equity. So even if the monthly payment is a little higher today, buying often wins on a 5-year timeline. Run the numbers for your specific situation.
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Patrick Kevin Fagan
Loan Officer and Realtor, AXEN Realty LLC
Not Sure Whether to Buy or Rent?
Patrick can run the numbers for your specific situation and help you make the right call.