Owning a home is a classic American dream and part of American culture. Right now, more Americans own homes than ever before. Yet purchasing a home is a considerable financial investment and does not guarantee that you will in the short or long run save money. Most people view renting as throwing away money. Why give your money away to a landlord when you can invest in your own home? The main considerations are your lifestyle, your ability to secure a mortgage and your financial situation.

As part of a lifestyle, apartments fit people’s time restraints. There are few maintenance or upkeep requirements for apartments compared to houses. For people in large urban areas, apartments give people the opportunity to live in trendy, fashionable neighborhoods that may only be affordable if they rent. Renting also allows people starting or changing careers more flexibility when a job dictates a move.

Not everyone can secure a mortgage. Despite the myriad types of mortgages and federal programs, some people simply have bad credit or too much monthly debt to get accepted for a mortgage or to get enough of a loan to afford what they want.

Other considerations are how much do you want to invest in a home and how willing are you to let that affect your lifestyle. Homes are expensive. In most circumstances, to live in the same area you rent in a comparable living environment (same size, luxuries, etc.) you will pay more per month for years. You also risk unseen expenses such as a major necessary repairs, property tax reassessment, or disasters.

A home does not guarantee equity or profit on sale. Like all investments, a home carries a level of risk. Because there are fees and costs with securing a mortgage, you will pay thousands of dollars up front for your home. Depending on your mortgage and payments it can take years to build enough equity to compensate that expense. If you need to sell in a few years, you may never recover those initial costs and face the expense of sales commissions with the sale of your home. If you move around much or anticipate needing to in the near future you will want to seriously consider the expense of short term ownership of a home.

Another factor to consider is the risk that your home or community may change dramatically, effecting your home’s property value. Does the community you live in have one primary company as an employer? Does your community have one major industry creating most of your community’s jobs? Can a down turn in that company or industry shift the demand for housing where you live? Are the demographics in your community changing? Are fewer people moving into your community? Is the average income in your community declining? What is the likelihood of crime rising or of there being a lack of appropriate funding for schools or city services? These factors among others effect the property values of entire communities or cities. If you are renting you can simply leave a changing area and you may even find your rent decreasing. If you own a home you may find the property decreased in selling value.

You should also consider what will happen to the entire housing market over time. If the economy is doing well homes tend to appreciate in value but in an economic downturn home values tend to stagnate. When you rent, you have more flexibility in reacting to major trends in the economy.

Despite risks and lifestyle changes, home ownership is a definite long term reward for most people. Recent changes in tax laws now allow for home owners to pull equity out of their homes without needing to be 55 years of age, making individual homes a much more flexible investment. You also gain tax benefits by deducting certain home costs from your personal taxes.

Whether it is best to buy or to rent depends on each situation. If you weigh the lifestyle and personal changes and risks you can make an educated choice and make the decision that is best for you.