According to David Bach, author of the best-selling "The Automatic Millionaire Homeowner: A Powerful Plan to Finish Rich in Real Estate," buying a home is still a wise move.

"We're seeing home ownership become accessible to more people," says Bach.

But owning a home isn't for everyone. Those that don't want the expense of maintaining a home and the commitment it involves may consider continuing to rent. The renter is able to move quickly and has little responsibility in the long run. And they have less of a financial interest in the property.

If you are convinced that your area is still in a housing bubble that will start to go down soon, you might consider waiting to purchase until conditions are more favorable to you.

If you have doubts whether owning or renting is best for you, you should consider all of the costs, pros and cons and long term consequences.

One pro that is rarely brought up is the net worth of a homeowner. American homeowners have a median net worth of $184,400, while renters are worth $4,000, according to the National Association of Realtors.

"For most people, it truly is their best asset, their most valuable asset," Bach says of homeownership.

"People work their whole lives and save, save, save, but buying a home and living in it will make them more money than anything else they do."

Bach suggests to ask yourself some questions before making up your mind.

First, how much home can you afford? The basic rule from the FHA is that your total housing costs, including mortgage, insurance and taxes, should not exceed 29% of your gross income. Your total debt, including credit cards, alimony, child support, student loans and car loans, should not exceed 41%.

Then ask where you will find the money. Mortgages come at a cost.

"You have to find some money," says Bach. "You can't borrow everything. But you can go in with pretty little. With $2,000 to $5,000, in many communities you can afford to buy a house."

Finally, look at ways to save money after buying. Look into the total cost of the mortgage. Bach recommends cutting that cost by paying your mortgage off early.

You can do this by paying biweekly, instead of monthly. Or simply add an extra payment to each year, for a total of 13 payments. This could cut your mortgage by years.

Bach says the average person can save between $50,000 and $100,000 on their mortgage by simply looking for ways to save.

"That's a lot of money," he says.

Posted by Ellen Plante on December 13, 2008 at 12:00 AM

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