FAQ - Frequently Asked Real Estate Questions
THINGS BEING EQUAL it's almost always better to own your home rather than to rent. After all, you build equity and get to write off your mortgage interest. And if you play your cards right, when you sell you'll be eligible for one of the best tax breaks around. But that doesn't mean that everyone should be a homeowner. If your move is short-term or if interest rates are high and property values deteriorating, it may be worthwhile to deal with a landlord for a while.
Of course, buying a home isn't strictly a financial decision. For most folks, the thought of constantly worrying about losing our security deposit every time we pound a nail or paint a wall isn't particularly appealing. Here are some other things to consider before making your purchase:
This may sound simplistic, but first and foremost you should find a neighborhood and a home that you just plain like. "You're not going to wake up in the middle of the night and say 'Wow! Look at my tax deduction!'" says CFP Lewis Wallensky. Moreover, you should check on the sales price trends of homes in that neighborhood. If it looks like the area is declining in value, then avoid commitment: You're probably better off renting.
Finally, don't forget that even with the tax-breaks of home ownership, you will still be incurring out-of-pocket costs that you wouldn't encounter as a renter — from the cost of ripping down wallpaper to repairing a leaky roof. So before you buy, estimate how much those costs will be. After all, you don't want to live hand-to-mouth — even if it is in your own home.