How to decide if you should buy or rent a house

More than just a mortgage

Many people think if their current rent payment equals a possible mortgage payment, then they should be putting their hard earned money into something they can call their own. This seems like solid logic, but owning a home is much more than paying your mortgage. When you buy a house, you are first required to pony up a down payment (you'll want to lower your mortgage), which will be in the thousands. You will then have to pay property tax, homeowner's insurance and shell out a lot of dough for home maintenance and repairs. All this adds up, and according to financial guru, Suze Orman, when figuring out the real total of your monthly payments, you should add 40-45% of your mortgage to determine what you will actually be spending.

Future plans

If you have the down payment and are prepared for all the extra costs, the next thing to consider is how long you plan to live in that house. If relocating is a possibility, renting is probably the best option so you won't have to go through the hassle of selling or even worse, losing money on your investment. Job security should also be a factor when deciding what to do. If you're fresh out of school, or if there's a possibility you could lose your job or get downsized, you might want to hold off on making such a large purchase.

Resale value

If you plan to live in your home for at least a couple of years, it could be a great investment for you. But if you buy a home and try to sell it shortly thereafter, especially with the market the way it is today, you will more than likely lose money. If something changes in your life and you need to make a quick exit, you might not be able to unload your house for a decent price.

Benefits of home ownership

Of course if you have the money, plan to live in your home for years and don't need to make a quick getaway, then there are many benefits to buying a house. Not only is it a good investment, but you will receive tax breaks, be eligible for home equity loans, free yourself from landlords and make any kind of improvements you wish, which will only add to the resale value.

Rent or buy?

Buying a house is a big decision and has many benefits, but it's also all about timing. So take a look at your finances and where you plan to be in the next couple years. Everyone you talk to will have a different opinion -- listen to them if you like, but don't feel as if you should be convinced by anyone. You're the only one who can really make this decision... and you're the only one that should!