Q My fiancée and I are getting married soon and were wondering whether it would be better for us to start out by renting an apartment or purchasing a house. Our friends tell us we'd be crazy to pay rent when we can be building equity in a home. What do you say?

A When comparing renting an apartment and buying a house, many would have the same response your friends did — “Why waste money on rent when you can buy a house that you'll own?” At first glance the argument makes sense. What is often overlooked however, are the substantial costs of home ownership, including the following:

E Purchase costs, including a down payment and the costs to obtain a mortgage, including points, title fees and loan processing charges.

E Ongoing costs of ownership such as property taxes, insurance, utilities, gardening and other expenses which increase the cost of home ownership in relation to rental of an apartment.

E Selling costs, including 3% to 6% of the sales price as a commission (unless you sell it yourself or work out a special arrangement with your Realtor) and other selling expenses.

In addition to the costs noted above, it normally takes years to build equity in your home because most of your monthly payment in the early years of a mortgage is applied to interest. As an example, if you take out a 30-year mortgage for $100,000 at 7%, you'll pay almost $7,000 in interest out of a total of $7,980 in payments during the first year.

Most newly married couples find that the first years of their marriage include a rapidly changing environment — from finishing college to starting a career and a family. These life changes frequently result in multiple moves which, based on the above, would be very costly in the event you owned a home.

Taking all of these costs into account, most young couples would be better off keeping their initial housing costs low and maintaining the flexibility that renting provides.

Once you have settled into your career and have a higher degree of certainty that you'll remain in one location for a longer period of time, it would make sense to start looking for a home.

Here are a few questions you can use to determine when purchasing a home makes sense: Are you reasonably sure you will live in the home for at least five years? Do you have a stable job? Do you have the means to make an adequate down payment (preferably 20%)? Are you keeping track of your expenses with a budget? Are you planning to provide the maximum opportunity for your wife to nurture your children at home full-time?

Because housing represents one of the largest categories of the family budget, making prudent financial decisions in this area is key to setting a solid financial foundation for your family.

God love you!

Phil Lenahan is executive director of Catholic Answers.