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Buying a home versus renting a home has been an internal debate many homebuyers and would-be homebuyers have had. With no shortage of advice from well-intended friends and family, the decision can become quite difficult for potential homebuyers.

The easiest way to determine if you should buy or rent is to look at the pros and cons on each side of the issue. Once you have reviewed the pros and cons, you can determine which makes more sense for you.

The home buying versus renting debate usually centers on the following topics:

* Financial considerations (costs)
* Ability to freely move
* Tax benefits
* Overall life plan

Financial Considerations

For most homebuyers and would-be homebuyers, financial considerations are the most important factor in making the decision. Though some financial experts are shocked that this is even an issue, many understand that the confusion over finances is primarily due to misinformation.

Most potential homebuyers are shocked to learn that they can buy a home and pay very close to (or even less than) what they are paying for rent. In fact, it is usually a good idea to sit with a mortgage banker early on in the process and tell him or her how much you would like to spend per month for housing. This can frame your search, because a mortgage banker can tell you approximately how large a mortgage you can carry for that monthly payment.

The Home Equity Factor

In addition to finding a home similar in monthly costs to your rental payment, you also benefit from the equity that builds in your home. When making a rent payment, you are paying for the right to live in your home for a period of one month. At the end of the lease you have nothing to show for it, other than the fact you had a home for that period of time (which of course is a great thing).

Home owners build equity as the amount they owe on their home decreases and the value of their home increases. This equity can become a major factor in their overall financial picture. The ability to take out home-equity loans and other lines of credit is a major financial benefit to buying a home.

Ability to Move Freely

Some people who consider renting over buying a home point to the fact that they can move more freely if they rent rather than being tied down to a house. Of course, the fact that leases lock a renter into the rental for a defined period of time shatters that notion. In fact, many people have found they can move more quickly and easily if they own a home by either renting it or selling it when they want to move, without worrying about breaking a lease or losing security deposits.

Tax Benefits of Owning a Home

The tax benefits of owning a home are substantial. It's a good idea to speak to your accountant or tax advisor about the benefits of owning a home and paying a mortgage (instead of paying a lease on a rental).

Homebuyers benefit from tax deductions and can build equity in their home. This gives people greater financial flexibility and more opportunities.

Some homebuyers take periodic home equity loans to remove the equity in their house and invest it in higher interest, safe investments. This helps improve their overall financial outlook. Home equity loans can also be used to pay off high-interest debts. The reality is that homebuyers have many more options at their disposal than renters do.

The Big Picture

Most people who choose renting over buying make the decision based on misinformation. The best thing to do is research options, speak to professionals, and then make an informed decision on whether or not you should rent or buy your home. After research, some may still believe renting is better. But most will find the decision is fairly obvious and will choose to buy a home.

* Copyright 2006, Brandon Cornett. You may republish this article if you keep the byline and author's note, and also leave the hyperlink intact.