Owning your own home may be part of the American dream, but in some instances it makes more sense to rent. Yes, your monthly rent check is a recurring cost you’ll never get back. But owning a home involves a lot more than just paying your mortgage.

What’s best for you? Here are some guidelines.

For an easy way to compare the costs, find the rent ratio by dividing the sale price of a home by the estimated annual rent. A high rent ratio (above 20, generally speaking) means the cost of ownership exceeds the cost of renting.

• Example: If a $250,000 home rents for $1,000/month, the ratio would be $250,000/$12,000 for a rent ratio of 20.8. In this case, it’s probably more cost-effective to rent.
  
  If the same home rents for $1,500/month, the ratio goes down to 13.8, and buying becomes more attractive.