Buying a home—the largest purchase most people will ever make—is the “American Dream.”

“Real estate is often an excellent investment, perhaps the number one source of wealth-building for families,” according to an online Federal Deposit Insurance Corporation guide for young consumers. “Owning your own home also can be a great source of pride and stability.”

But home ownership isn’t for everyone.

“There are some trends taking place in American society regarding the redefinition of the ‘American Dream,’” says Bill Deegan, CEO of Renter Nation, a group that advocates for renting. “Success is not measured by whether you own a cozy little house in the suburbs.”

Consider these five tips when deciding whether renting or buying is right for you:

1. Check your credit score. Whether you want to rent or buy, knowing your credit score is important, says Brian Sullivan, a spokesman for the federal Department of Housing and Urban Development (HUD).

“Your credit profile will drive everything. So if you can repair a blemished credit record before you start the home-buying process, that’s good,” Sullivan says. “You don’t want to find out when you’re about to apply for a mortgage that you have a bad credit score.”

In the same respect, Sullivan says, landlords also look at credit history when deciding whether to offer a lease.

“The Fair Housing Act protects your housing rights. But if you have awful credit and you’ve demonstrated an inability to make timely rent payments or mortgage payments in the past, then somebody can turn you down, definitely,” he says.

You can obtain one free copy of your credit report once a year from each of the three national credit reporting agencies by going to You can obtain your credit score more than once a year for a small fee.

2. Decide what kind of financial commitment you want to make. A 2013 MacArthur Foundation survey found that the nation’s economic uncertainty has made home buying less appealing to some people. The financial commitment of buying a home can be overwhelming, Deegan says.

“To tie up a huge amount of capital might not make the best sense in the world,” he says.

But homeownership is a great way to build equity, says Alice Kuder, a Realtor with Prudential Northwest Realty in Seattle. Instead of paying landlords each month, homeowners, while paying interest to a bank, are putting money into something they’ll get back if they decide to sell.

“Buying a house is a savings account, really,” Kuder says. “Historically, the value, even if it goes down, it eventually comes back up.”

3. Know whether you can afford home repairs. According to a 2013 study by Trulia, buying a home is, over an average of years, significantly cheaper per month than renting in many markets.

“If you’ve got the down payment part, your monthly payments from a house are going to be often less than your payments for rent will be,” Kuder says. “But the big challenge for everybody is coming up with the down payment. But now there are so many loans that are only 3 percent interest that it’s not as big a deal [to come up with the money].”

But this doesn’t take into consideration the amount of money renters save by not paying for home repairs, Deegan argues.

“The advocates for people to buy a home never mention that you’re going to have to keep the roof solid, you’re going to have to do all the internal appliances and things like that,” Deegan says. “It costs a lot to maintain a home.”

4. Decide whether you want to stay in the same area for a long time. A home purchase can be a great investment, but usually not in the short-term, Kuder says. Generally, the longer you stay in a home, the more equity you build.

Renting, on the other hand, offers the flexibility to move around and change neighborhoods, cities or even countries without having to sell a home, Deegan says.

5. Find a housing counselor to help talk you through the process. “There are hundreds of agencies around the country supported by HUD where you can find these counselors,” Sullivan says.

Housing counselors may charge a nominal fee, but they’ll talk you through the decision-making process and help you choose whether renting or buying is right for you.

Whether to rent or buy, Sullivan says, “is a highly personal decision.”