From our money & finance contributor, Kelly Whalen.

One of the largest expenses we have is our homes. Whether you’re renting or buying your home it can add up fast. While most financial experts recommend you spend 25% or less of your earnings on your home costs, location plays a huge factor in whether you can meet that guideline or not. This month we’ll be evaluating how to make the decision to rent or buy, and I’ll share some money saving tips that will help whether you rent or own your home.

When deciding if you should rent or buy it’s important to consider a number of factors:

1. Evaluate your Needs and Where you Are
Knowing what you need in a home or rental is the first step to your evaluation between renting vs buying. In addition to knowing what you need in a home, location plays a big factor. Look at the community you want to live in, but don’t be afraid to look outside your ideal area because the savings may be worth it.

Renting: If you’re renting it’s easier to look for something that fits you right now, but that may be a mistake. Consider what plans you have in the next several years because it is easier to stay put than it is to move you want to ensure you don’t go through the upheaval of moving multiple times especially if you have a family.

Money saving tip: Before you sign a lease find out if your rent is negotiable. For instance you may be able to make repairs or improvements for savings.

Buying: If you’re buying or own a home you will want to consider a little more long-term. For instance, if you’re planning to add children to your family or possibly care for an elderly relative you’ll want to be sure your home has enough room to grow into.

Money saving tip: Homeowners should evaluate their mortgage to see if refinancing will save them money.

2. Cost is King
Cost is a major factor in your decision to rent or buy. The costs of home ownership and rentals in your area will play a big role in your decision. In some communities and urban areas it never makes sense to buy because rent is low and home prices are high. In most areas though it can save you money in the long run to own your own home. As rental prices increase your mortgage payment will stay the same.

Renting: One of the major costs of renting a home is the deposit you have to put down. Generally this will be 2-3 times the monthly rent. In some urban areas they will require a larger deposit especially if you have poor credit. This could end up costing you several thousand dollars to tens of thousands in higher priced areas. In addition, you will have to factor in what other costs are covered (or not) by renting. Your rent could include utilities, WiFi, and water bills or might even include a building gym or services especially if you live in a metropolitan area.

Money saving tip: Consider all the costs you will have to pay when comparing rentals. If you find a rental that’s going for $1,000/month but you have to pay $300/month in costs for electric, water, and association dues that is more expensive than the $1,250/month rental that includes everything.

Buying: The major cost for buying is the down payment on your home. With the collapse of the housing market options have become more limited for people who don’t have a large down payment. However there are options to consider, so be sure to check with your local bank and mortgage broker. In addition you will have moving costs and repairs to consider if your home needs anything immediately.

Money saving tip: Shop around for pre-approval for a mortgage if you decide to buy. You can save tens of thousands of dollars by doing your homework on mortgage rates.

Prepare to Save

No matter if you’re buying or renting here are some steps you can take to get a better deal:

1. Improve your credit-
Use your free credit reports (1 per agency each year) to ensure everything on your report actually belongs to you and there are no false reports on your credit. I

Money saving tip: A credit dispute can take up several weeks to be fixed and can affect your mortgage interest rate and your ability to rent.

2. Research, research, research-
Knowing what typical rent and home prices are is the key to finding a good deal and simply not overspending on your home. You can use sites like Zillow, RedFin and local realtor sites to get an idea of pricing.

Money saving tip: Set up email alerts or app alerts so you don’t miss when new properties become available.

3. Set Expectations-
Know that there will never be the ‘perfect’ home. In most cases we have to choose the best options out of what is available and what we can afford. In some cases this means trading square footage for location or choosing an older home because the neighborhood schools are worth sacrificing granite countertops.

Choose the things that are the most important to you now and think ahead for the next several years. Will this house or rental suit your needs as your kids get older? Or are your kids older and you’ll be able to live with less space in a few years?

4. Real Estate is not an Investment (for Most of Us)-
While there are exceptions (like people who make it their business to buy and sell real estate) for most of us our homes are simply a place to live. While it’s important to pay attention to the costs it’s unlikely the housing market will climb the way it did pre-housing boom in most areas.

Since most families don’t stay in their homes and locations the way they did in past generations it’s not as common to pay off your home mortgage. Even if your mortgage is paid off and you own your home outright you will still have the costs of repairs and upkeep. When/if you do eventually sell a paid-off home you’re going to use that money to buy again.

5. Repairs are Costly-
If you’re renting, having a landlord means you will have someone to lean on when things need to be repaired and won’t have to cover the cost yourself. While you may not incur the cost directly it will be passed on in the form of your rent.

If you buy a home all the cost and work of repairs will be on you. While you can DIY some things larger repairs can be get expensive. An inspection before you buy will help identify some needed fixes when buying a home, but you may encounter things you didn’t expect.

No matter what you choose or how you save money on your home it can be challenging but worth it both financially and for your happiness. Examining costs and weighing your options may not seem especially exciting but by saving on the place you call home you can slash your budget significantly.

Of course there is one thing you can’t put a price on and that’s the feeling you get when you’re truly home.

For more in our series of money savvy tips read:

• How to Deal with the Unexpected
• Reducing Expenses: Putting the’Personal’ in your Finances
• Budgeting 101: 5 Easy Steps to a Budget That Works
• Earn More Money to Help Save More and Pay off Debt Faster