The new real estate reality: To buy or not to buy?

(BPT) - Generations of Americans have considered owning their own home a key aspect of achieving the American Dream. But the lingering aftermath of the Great Recession has caused many people to rethink that belief. Rental occupancies are rising as more Americans opt to lease their homes, rather than buy.

Long gone are the days when Americans assumed home ownership could only have a positive impact on their finances, and that renting was equivalent to throwing money away.

Like any debate, the question of renting versus buying has pros and cons on both sides. Buying a house creates the potential to build equity and provides a sense of stability, while renting affords a level of mobility. In many areas of the country, the gap between lease costs and monthly mortgage payments has narrowed, making both options equally affordable.

While the decision to rent or buy will depend on your personal circumstances, when you're considering the question some facts are universal. Among them: What impact might your credit have on your decision to buy or rent, and what impact will either option have on your credit score?

When you're evaluating whether buying a home or continuing to rent makes sense for you, consider these facts:

* Rental vacancy rates have been falling while rent prices have been rising, according to the U.S. Census Bureau.

* While home prices have begun to increase again in some metro areas, the majority of regions continued to see them falling in 2012, according to data from the National Association of Realtors.

* A 2011 study by Experian found that while more Americans are paying credit card bills on time, the percentage of consumers paying their mortgages late by 60 days or more rose 25 percent.

Existing debt and the impact home ownership might have on your credit and overall financial situation are key considerations when deciding whether to rent or buy.

American consumers had more than $252 billion in outstanding debt as of December 2011, according to the Federal Reserve. If your share of that amount is already significant, taking on a mortgage might be problematic. Even if you can get a mortgage with a lot of pre-existing debt on your credit report, how will the additional monthly costs of home ownership affect your ability to pay other bills?

On the other side of the argument, if you have little or no debt, have a good credit score and a stable job, mortgage rates are very low right now. Buying now could save you thousands in interest costs over the life of a loan.

Your first step in deciding whether renting or buying is right for you must be to understand your credit. Landlords and mortgage companies will both check your credit, so it pays to know what they'll find. Websites like freecreditscore.com can help you obtain and better understand your credit score.

Ultimately, the question of whether to rent or buy will have different considerations and implications for each individual. But regardless of your situation, the resulting impact on your credit standing should be a key consideration, since that will affect all other aspects of your financial wellbeing.