Is it better to rent or buy a house? These expert tips can help you decide

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With home prices skyrocketing, buying a home may be out of reach for many in America.

But rents are also rising.

So how do you know if you should buy or rent?

It depends on a number of factors, according to experts.

“If you're not sure, it's best to make your decision based on your personal situation and personal needs,” said Lexie Holbert, realtor.com housing and lifestyle expert.

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Home prices rose 19.2% year over year in January, according to the S&P CoreLogic Case-Shiller Index.

Meanwhile, single-family homes for rent rose a record 12.6%.

In addition to rising prices, mortgage interest rates are also soaring, reaching their highest level in more than three years last week.

Stock image of a house for sale. The Good Brigade / Getty Images

The math indicates that it is generally a better deal to buy a house.

But rising interest rates are narrowing the gap, according to analysis by consulting firm ATTOM.

Owning a median-priced home is more affordable than the median rent for a three-bedroom home in 58% of the country, ATTOM reported in January.

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Without a doubt, the price is an issue for many.

64% of non-homeowners said that was their main impediment to buying a home.

43% of them said their income was not enough, according to a Bankrate survey.

Here's what to consider before making a decision about buying or renting a home:

timing is everything

Before you buy, think about where you are in your life.

Are you looking to settle down somewhere for a long time or will you be moving in a couple of years?

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As a general rule, it takes five to seven years to occupy a house to recover the costs of the purchase, Holbert said, including the deed, which adds between 2% and 5% to the purchase price. “If you already know where want to live for the next few years and don't think that's going to change, so now might be a good time to buy a home," Holbert said. "If you're unsure, renting might be a better option because of the flexibility of moving," he added.

Check your finances

Ask yourself if you are financially prepared to own a home.

That includes having enough emergency savings in case something happens in your first year as a homeowner, Holbert said.

He must also have enough monthly income to pay the cost of the mortgage, taxes, and insurance, as well as additional monthly expenses, such as utilities.

Check your credit history, as it has a direct bearing on the terms of the mortgage and the interest rate you will have to pay.

If you see any errors, correct them before applying for a loan.

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If you can't afford the monthly payments, keep renting and keep saving money if your ultimate goal is homeownership, Holbert explained.

If the price of rent is keeping you from saving, consider renting something smaller or making other big lifestyle changes to save more money.

"You'll read that if you cut back on your $4-a-day coffee habit, that could really help you save for a house," he said.

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"While it's great to save, where you'll really find that you can cut costs to have enough money for a down payment is in rent or car financing," Holbert said.

know your limits

Finding out how much you can afford to buy a home is especially important now that home prices are rising, Greg McBride, chief financial analyst at Bankrate.

In this way, a limit is placed on the price of the home that you can afford.

“The position you don't want to be in is falling in love with a house and having your offer accepted and then having to figure out how to pay for it,” she said.

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Check out homes in your price range on sites like Realtor.com or Zillow to see if they fit your needs.

You can also use online calculators to help you make a financial decision like renting or buying, including those from SmartAsset, NerdWallet, or Realtor.com.

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Also, keep an eye on rising mortgage rates, Holbert warned.

The Federal Reserve has indicated that it will raise interest rates the most this year, which, in turn, affects mortgage rates.

That's why, if you're currently thinking about buying a home,

, he explained.

Don't get caught up in the fear of missing out.

That could lead him to regret buying it and put him in a financial bind later, McBride said.“The novelty of that house will wear off;

but the mortgage payments won't,” he added.

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