Renting vs. Buying a Home

The national median mortgage payment is $1,687 a month -- nearly double the median rent payment of $868 a month.

Yet people are often told that buying property is one of the strongest investments they can make.

What is the best option?

"Good Morning America's" real estate contributor Barbara Corcoran says it depends on your needs.

She's the founder of The Corcoran Group, a major New York real estate agency, and she's outlined some of the pros and cons that come along with both renting and buying.

She's also outlined other things you should know about foreclosures and mortgage rates.

Rent Pros:

Mortgage payments exploded during the real estate boom, but rents haven't kept pace, often running half as much as what homeowners pay.

Home prices recently rose to skyscraping heights in cities like New York, San Francisco, Los Angeles and Washington. Rents have not gone up as much.

For a family making the U.S. median income of $46,913, owning the median-price home of $224,739 would eat up 51 percent of its income. Renting would require just 25 percent.

By renting, you gain the flexibility of a lease and freedom from home repairs. You can also invest more money in stocks, bonds, and other assets that could appreciate faster than real estate over the next couple of years.

With real estate agent commissions, loan fees, title insurance, inspections, and all sorts of other costs, your property must appreciate approximately 15 percent just for you to break even and recoup these costs.

If you choose to rent, you can sit out potential drops in market value. In June, condo prices fell 2 percent nationwide and single-family home prices dipped in several markets, including San Diego, Boston and Washington. Who wants to find out they've lost equity just a month into a new mortgage?

If you rent, you can live "beyond your means" in a sense. You can live in a location where you would be unable to buy a home. One broker told us he was renting a house in Santa Barbara, Calif., for $3,000 a month. The house has an estimated market value of $1.4 million. That would give you a mortgage of $6,000 or more per month.