REAL ANSWERS

Q: How do I figure out whether it makes more sense to continue renting or buy my first home?

A: Homeownership offers tax benefits as well as the freedom to make decisions about your home. An advantage of renting is not worrying about maintenance headaches and other financial obligations associated with owning property.

There are also economic considerations. Different than renters, homeowners who secure a fixed-rate loan can lock in their monthly housing costs and make prudent investment plans knowing these expenses will not increase substantially.

Homeownership is a highly leveraged investment that can yield substantial profit on a nominal front-end investment. However, such returns depend on appreciation.

“For some people, owning a home is a great feeling,” writes Mitchell A. Levy in his book, “Home Ownership: The American Myth,” (Myth Breakers Press, Cupertino, Calif., 1993) “It does, however, have a price. Besides the maintenance headache, the amount of after-tax money paid to the lender is usually greater than the amount of money otherwise paid in rent,” he concludes.

Other Resources: “Home Buyers Guide” software includes work sheets comparing the cost of renting vs. buying. Produced by Tera Solutions Inc., Belmont, Calif., 1993; $49.95.