Should you buy a home or rent a home?

The "American Dream" typically includes the wonderful possibility of homeownership.  However, whether or not you buy a home or rent a home depends on your situation.  For some people renting may be the answer if they are still trying to stabilize themselves financially or if they just aren't in a financial situation to buy a home.  When relocating some people like to rent for a few months to get a feel for which neighborhood they want to live in.  Renting can help you keep your costs low since a landlord is typically responsible for all repairs.  And in some areas, home prices are so high that the only viable option may be renting.

Buying a home definitely has it's advantages.  Buying a home is an investment.  If done correctly you could build up equity over time.  In a typical real estate market, home values increase from 3% to 5% annually.  If you pay an extra mortgage payment once a year, or pay on a bi-weekly basis, you can cut years off of your 30 year mortgage so you can start lowering how much you owe on your home.  And you end up paying less in interest.  The equity that you build up can help you work toward retirement or whatever your long term goals may be.

Homeownership has other advantages as well.  When you purchase a home you can deduct the cost of your mortgage loan interest from your federal income taxes.  Most states also allow you to deduct the cost off of your state taxes as well.  Since the interest that you pay will make up most of your monthly payment for most of the years of your mortgage, this can save you a lot each year.  Finally, most people enjoy having a place they can call their own and customize to fit their lifestyle.  Owning a home typically provides a sense of security for most homeowners. 

Not sure if you should buy or rent?  Your first step should be to speak to a mortgage professional to determine if you qualify for a mortgage loan.  After that you should sit down with a local Realtor and get a game plan together for finding a new home.  If you can't qualify for a loan right now don't despair!  Most mortgage professionals will help you set up a plan of action to help you work toward home ownership.