by Blair Mahoney

Created on: May 30, 2008   Last Updated: October 23, 2009

For many of us, the dream of home ownership is embedded in our character as we grow up. We've driven past mansions, seen larger houses of friends and family, and now we have the "owner's itch". As a young man of twelve years old, I remember leafing through the local real estate magazine, just flipping through and circling the various styles of houses I liked. And there were a lot of houses I remember liking, most containing vast amounts of floor space and pillars, and many windows. Fast-forward to now, reality. Many of us are faced with the fact that life is expensive. Really, really expensive.

We pay on average 30% of our paycheck to the U.S. government. Many of us pay more. After the government is done taking, we're left with the remaining 70% of our pay to live life with. We pay for utilities, car insurance and possible car payments, all types of insurance(s), food, clothing, possible student loans, and rapidly climbing gas prices. This doesn't even include fun activities such as vacations, trips to the movies, eating out, or mini golf. It's reality, friends, and if we can nail down those expenses, then we can make a decision as to whether to buy or rent a home.

And to make matters even more fun, there is no one-fits-all approach to making such a decision. There are many variables to calculate, and I'll stick with four for now.

First, consider if you can handle paying a mortgage every month. You'll be paying principle, interest, property taxes, insurance, and possible PMI. Then, keep in mind upkeep. You'll need reserve money to pay for any maintenance issues and major home appliance replacements. If a furnace falls apart, do you have the $3000 to replace it? Also, consider the extra money needed to pay for updates and interior and exterior changes that are inevitable if you buy a home.

Next, figure out if you want to make a commitment to buy a home, since this is a long-term relationship you're getting into. And yes, it is a relationship; you'll have to find trustworthy insurance agents, a possible Realtor, a mortgage lender, reliable people to work on your home, and your home itself. Ask yourself, "is this particular home going to be worth it?".

Don't forget to plan on the size of home you need. How many people and/or animals are going into this home? What are the pros and cons of its location? Here is where you need to ask all the tough questions about your needs, and whether the home and its location meet your needs. If you love the country yet want to be near where you work in the city, is it worth paying more in gas and wear and tear on your car than living in the city and bearing the noise? Pay close attention to all the details about the home and location.

Fourth, ask yourself if you'd rather throw money at rent, or build equity in a home. Sure, a home has costs you'll never recoup. Yet you'll still build equity, and eventually you can tap that equity or sell when the time comes. This thought is compelling, and a major reason I believe it's worth going through the hassle of hunting for and then purchasing a home.

This is merely a starting point for the considerations of deciding to own a home or not. As you think and plan more, your decision tree will branch off into other areas. Don't stop asking questions of a real estate agent, friends, family, and people you trust. If you really want to own a home, it's worth the effort.

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