Real estate in most areas today is not a top investment compared with investment securities. Wealth accumulation is secondary. Still, as shelter, most experts say if you can afford the down payment, it makes sense to buy your home rather than rent it. That's because you can deduct mortgage interest on income tax and build equity in your property. This is especially true when mortgage interest rates are low.
Some people take a middle road.
They ease into homeownership by renting a house or condominium with an option to buy. Lease-purchase gives a buyer time to save for a down payment or to clean up a credit history. It can work in a buyer's favor in areas where real estate values are rising quickly at a rate of 10 percent a year. In most agreements, the seller allows a portion of the rent to be applied towards the purchase price, which some lenders consider to be part of the down payment. The amount of rent credited could be 10 percent to 100 percent, based on your contract.