Should you rent or buy?

Historically, young people have bought houses after getting married. These days, though, many newlyweds have no choice but to rent in expensive cities, while affluent singles are buying larger homes in suburbs and exurbs.

That means deciding whether to rent or buy is more complicated than it was a generation ago. To find out what’s best for you, ask yourself these three questions.

How long do I plan to live in this home?

If you don’t know, don’t buy.

If you’re not ready to settle down, then you’re probably not ready to buy a house. Buying means committing to live and work in a set geographic area and to earning a minimum amount of money each month.

You should also put off buying until you know what you need in a home. Consider, for example, how large your family may be in the future, beyond how many will be living in the house when you first purchase.

You should be satisfied with your job and be aware that you will be giving up a certain amount of flexibility in lifestyle, travel, and work.

Can you afford it?

Most first-time buyers focus on the mortgage, but that’s only one part of the total cost.

Property taxes, insurance, utilities and maintenance fees add up quickly. And you may run into forced renovations if you’re the second or third buyers of a townhouse or condo. For serious problems, such renos can cost between $30,000 and $100,000.

While you can rent out some or all of the property to help make ends meet, being a landlord means making the property compliant with tenant codes, performing regular maintenance and quickly responding to emergencies. Plus, tenants don’t always pay on time or in full.

What’s more, rental income is taxable and claiming expenses can be an administrative headache.

What does a home really mean?

This is the most important question.

Having $200,000 in home equity is not the same as having $200,000. Within a financial plan, homes are classified as shelter only, since you can’t access home equity during emergencies. Even if you manage to sell your place on short notice, you may not get as much for it as you’d expected.

Don’t think of your house as an asset. It’s shelter; a lifestyle choice that can provide a source of fulfillment—provided you can afford it and are prepared for all the costs.