Should you buy or rent?

So, you're planning to get a new home. Should you buy one or rent one? Well, it depends.

Do you know the neighborhood well? If not, get very familiar with it before buying, lest you end up with unpleasant surprises, such as a nearby landfill or frequent ambulance sirens. Renting for a while can help you learn about an area.

How long do you plan to live in the home? If it won't be long, renting can be better. Buying involves closing costs, which you can't recoup when you sell. Also, homes may lose value over a short period; that's less likely over a long one.

Are you able to maintain your home? Owners must do so, and maintenance takes time and money — especially if pipes burst in the winter or a new roof is needed. Renters can expect landlords to handle such challenges.

But buying a home offers benefits, too. For starters, your monthly housing payments can help you build equity that can be tapped later; down the road, you may end up selling your home for a profit. Having a lot of home equity may also help you secure a reverse mortgage in retirement if you want one, providing some needed income. (Note that renters can build wealth without real estate by investing in the stock market over a long period.)

Buying a home can also deliver some modest tax breaks, such as deductions for mortgage interest and/or property taxes paid. Read up on the rules for these — property tax deductions, for those who qualify, are currently capped at $10,000 per year (and that cap includes state and local income tax deductions as well).

Finally, buying a home can give you some stability. Renters may be forced to move if their landlord needs or wants them out, but as long as homeowners pay their bills, they can stay in their home. And fixed-rate mortgages mean that monthly loan payments will remain constant.