Before considering what type of mortgage you want, how much you can afford, and other choices you have to first make sure you are ready to buy rather than continuing to rent. While owning a home is sometimes considered a part of the American dream, it may not fit everyone's immediate situation.

While renting is generally considered inferior to owning, it has its advantages. For one thing, your costs are much more fixed than with owning. And while you won't be gaining equity, you are guaranteed not to lose equity, either. Renting also affords a level of convenience - when the lease is over, you can simply move out, and there is generally much less work involved in maintaining a rental home or apartment. Renting also requires a much smaller investment of money up front.

On the other side, renting prevents you from gaining equity no matter what happens to the value of your home. You will have, at best, limited ability to update and personalize your living space. You also lose out on any tax breaks by renting - your landlord gets to take advantage of any lower taxes.

As for owning, its advantages are well documented. Over time your equity will increase and your mortgage balance will decrease, no matter what happens to the value of your home. You get complete control of your home, with the ability to remodel, renovate, or expand your home in any way you choose. Plus, home ownership offers numerous tax advantages.

Disadvantages include variable costs and levels of equity. Moving can also be more difficult, since it will require you to arrange a sale. All work has to be done by or paid for by you, and owning a home requires a larger initial investment than renting.

In general, ownership is better for those who are already established and have a high level of stability. Most people want to own a home eventually, but because of the advantages and disadvantages inherent to one both owning and renting, waiting until the time is right is advisable.