All things being equal, its almost always better to buy a home than rent. Renting may better if your rent is extraordinarily low or if you're moving in the next year, but even in these cases, the investment value of a home may make it the smarter choice. The primary benefit to owning a home is also the most challenging to calculate: building wealth. Home ownership builds wealth in two ways. The first is through forced savings of paying down a mortgage. Since you own the home, your monthly payment goes towards your investment, not unlike putting money aside for future savings. The second way ownership builds wealth is through appreciation - the homes rise in value over time. The weakened economy and decreased home prices may make you question this idea. We know values will go up eventually, but even for now look at it this way: say you have $250 per month for housing and investment. You pay $150 in rent and $100 into the stock market. If the stock market goes down by 50%, you have an investment worth $50. If, instead, you put $250 into a mortgage on a home worth $2,500, even if the home goes down in value by 50%, you still have an investment worth $1,250. You have to spend money every month on housing anyway - either you put it into someone else's investment or your own. Additional hidden benefits to ownership are tax credits and interest deductions. Before considering buying a home, consider the costs and determine if you can afford to buy. Costs of ownership include mortgage payment, property taxes, insurance, monthly maintenance costs, HOA dues and utilities. Before looking at homes, in person or on the internet, talk to a lender and get pre-approved so you know what price range to search or how much you need to save to get into the price range you want. The earlier you get in the game, the quicker you can build wealth through home ownership. The longer you wait well, the missed opportunity grows larger.
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