Dear Dr. Don,
I recently lost my home to fire. I have approximately $450,000 and it would take almost $400,000 to rebuild a larger, better home. I don’t want to buy.

Should I build, at about $180 per square foot? Or, should I rent, invest conservatively, live off the interest and wait?

MJ Mortgage-Free

Dear MJ,
Wait for what? Mortgage rates are low and housing prices are either declining or soft in most U.S. markets, making it an opportune time to either buy or rent.

I don’t know if you can live off the interest, even with $450,000 to invest. If you invest that money in a five-year CD at 4.7 percent to 4.9 percent, you’ll earn about $21,000 to $22,000 a year pre-tax. That’s not chump change, but it’s not easy street, either.

Bankrate has a ”
Buy vs. rent calculator” that can help you scope out the financial differences. Bankrate’s Holden Lewis also put together a ”
Buy vs. rent quiz” that can help you think through some of the qualitative aspects of your decision.

There are a host of reasons why it can make more sense to rent instead of buying. Maybe you don’t like the responsibility of being a homeowner. Or perhaps you don’t plan on living in an area for long, or want to try an area on for size before buying.

Renting now because you expect it to be cheaper to buy later probably won’t pay off.

To ask a question of Dr. Don, go to the ”
Ask the Experts” page, and select one of these topics: “financing a home,” “saving & investing” or “money.”