If you are currently renting, you need to know about the possible advantages of home ownership, and if they apply to your current situation. Are you financially ready to make the substantial investment? How much can you afford? Is the current local and national market favorable for you to buy a home?

Renting versus. Buying
Compare the cost of owning and renting the same home. Just take the monthly mortgage and other housing costs and compare it with the cost of renting that same property. Remember to figure the tax savings by taking the cost of the mortgage payment plus property taxes and multiplying that by your tax rate. This will give you a fairly good idea of your tax savings each month. Subtract those savings from your monthly housing costs if you were buying and compare that with the rental rate. If they are very close in monthly expense it is usually a good value to buy.

This can also be a good way to compare the current housing market. It will tell you if the current home prices are at fair value, or if there is over pricing or under pricing. Keep in mind that in some very desirable areas it will almost always cost more to buy then to rent. If the additional expense is more then 20 to 30% you should be careful in your decision.

Some Advantages of Property Ownership
It should cost you less to own a home then to rent. There is a fairly simple calculation that will tell you this (however changes in interest rates, down payment, tax and additional fees may increase this factor)

Take your monthly rent * 200 = purchase price

$___________rent per month X 200 = $_________________

Example: $1000 X 200 = $200,000

In this example, the payment on a $200,000 home would be comparable to a $1000 monthly rental payment.

In addition to the current cost of rent versus purchase, you must also take into consideration the future cost. Renters are exposed to possible rent increases in the future. It is reasonable to expect an annual increase of up to 4% per year to a rent payment.

There are many advantages to home ownership. The value of a home usually increases during the years that you are paying your loan down. This increase in equity is building up the wealth you accumulate in your home. Even without this expected increase in value, paying on a mortgage over 30 years can guarantee that you will own your home free and clear. The equity you are building in your home can be borrowed against at some future time for college expenses, vacations, remodeling the home or almost anything else you might need the money for.

Another benefit to home ownership is that you are not subjected to the intrusion of a landlord. Generally no one can tell you what you can and can not do with the property. If something is broken you are not at the whim of someone else as to when, how, or why it should be fixed. A landlord can decide to sell the property and put you out into the street. As a homeowner, you have the security of knowing that you have a place to live, as long as you continue to meet your mortgage and tax obligations.

Advantages of Renting
In most cases, it is easier to find a place to rent than it is to find a place to buy. If you are renting, you will more than likely put up with some minor inconveniences. If something gets broken, you don't have to concern yourself with the cost involved to fix it. If the quality of the repair is not to your standard it doesn't matter as much if you do not own the property.

Assuming your rent payment is below your income threshold, you do not have your money tied up in a property. This allows you to have more flexibility in deciding where you live and how long you want to stay there. You can keep your additional cash for other things that come up in your life since you don't have to budget for repairs and expenses.

At the end of the day you need to make the rent versus buy decision for yourself, as you know your financial situation the best.