We all understand the allure of buying a home. Many of us have purchased a home (and later sold it). But most experts agree that right now it makes far more sense to rent instead of buy. Owning a home may still be the great American dream, but with the recent economic problems and foreclosures all across the country, owning a home has become a nightmare for millions.

If you’re thinking of buying a home, we want to give you a chance to consider the following to help you make the best decision for your needs. Keep in mind that the beauty of renting is it that it’s not permanent, but can provide a flexible solution for several years until you are in a position to reassess your current needs.

Renters rarely have to put more than the amount equal to two month’s rent down, as well as a security deposit (which, if all goes well, you may get back anyway). But, more often than not, a down payment on a house will be between 10-20% of the asking price. Depending on the current price of the home you’re looking to buy, this could mean tens of thousands of dollars and the need for a minimum of 720 credit score for the least amount of hassle.

In a perfect world, that down payment would become equity but, as I’ll explain below, that outcome doesn’t always happen. If you want to turn your down payment into an investment, there are many ways to do that besides buying a home. Plus, if you buy a home you’ll also need to have extra money set aside for any unexpected costs that come up during the process of moving in (such as repairs that were not identified prior to the sale of the house). Keep in mind the average home purchase age 10 years of more has proven to require 10 percent in repairs that were not found by inspectors.

Risk seems to be the most commonly overlooked factor when someone is considering buying a home. It’s something usually ignored too when purchasing a home. The risk that comes with homeownership is high for several reasons:

• If you’re married and base your mortgage payments on two incomes, you’re in risk if you don’t factor in the possibility of losing one or both of your incomes.
• Homeowners face a good possibility of being foreclosed on, while renters face zero percent chance of foreclosure.
• You’re at the mercy of the housing market. As we continue to see housing market collapse and the new economy that we face, when you can’t pay cash for a home, you end up running the risk of owing the bank more money than the house is even worth.