Economics

• Your own finances and your lender's requirements will dictate if you can afford to buy a house. Use a financial calculator to determine the cost of home ownership versus renting (see Resources). Also, consider national as well as regional economic forces at play when you consider buying versus renting. When market conditions are deteriorating, interest rates are high and future home appreciation is questionable, it may be more prudent to rent a house than to buy one. When market conditions are favorable, home ownership can make sense.
  
  

Time Frame

• How long do you expect to live in your new residence? If you live in a purchased home for less than two or three years, you may not recoup the closing costs on the purchase of a home and you may not see enough appreciation to make it worthwhile. If you face job uncertainty, you may be better off renting.
  
  

Lifestyle

• Are you cut out for home ownership? Your responsibilities as a homeowner don't end when you pay your monthly mortgage, homeowner's insurance and real estate taxes. There is no landlord to call if your boiler breaks or your home needs painting. Even a just-built home needs maintenance. Yet home ownership can instill a sense of pride and accomplishment that renting cannot match.
  
  

Benefits

• Home ownership offers some of the best tax advantages available to taxpayers. When you itemize your tax deductions on your federal return, you can deduct the interest on you mortgage payments and any points you pay to close your home loan. Your real estate taxes are also deductible. If your home is damaged due to a natural catastrophe, you may deduct some or all of those losses.
  
  

Considerations

• Paying a landlord is not necessarily throwing money away. For example, consider taking the money you might otherwise use as a down payment on a home and deposit it into a fixed-rate investment. You will guarantee a return on your investment. However, you cannot guarantee a return on the investment you make in a home. Continue to invest regularly with money you do not use for homeowner-related expenses to further enhance your return.