If you're planning on moving in the next five years, rent
If you think you want to buy a home, you should first consider how long you plan to stay in the area. If you think you might move again in the next few years, it's a better plan financially to simply rent an apartment in Raleigh, NC, as the first five years are the hardest for building up equity.
Why is that? There are several reasons.
First, the first five years of the mortgage are the worst years for building equity. The large majority of each mortgage payment goes straight toward interest. On a thirty year mortgage, you build approximately 5% of your home’s value in equity during the first five years of the mortgage.
Second, much of that small amount that you do build in equity will be eaten by realtors when you sell. The FSBO route has challenges and expenses involved as well.
Third, what equity isn’t devoured by the realtors will be devoured by the bank. Closing costs can add up to be a large portion of your mortgage, particularly when you’re really only concerned about the small amount of equity you’d build during that time.
Finally, the housing market isn’t the same as it was seven or eight years ago. At best, home prices are stable. In many areas, they’re still drifting downward. You’re not going to make a mint by buying a house and then flipping it.
The Christian Science Monitor