Important Home Buying Questions
By Steve Gillman - 2008
The following quick list of home buying questions is meant
to get you to think carefully about what may be the biggest purchase
of your life--and the biggest ongoing expense. They are not only
meant to help you choose the right house, but also meant to get
you thinking about whether you should buy a house in the first
place. Let's get to the list...
How long will you be living in the home?
Of course this is a guess, since life is unpredictable, but
make the guess. If you aren't planning on living there for more
than five years, you are probably better off renting. This is
especially true when real estate values are stable or falling.
But even when they are rising at normal rates, you eat up so
much money in the transaction costs of buying and selling that
you need to sell for substantially more than you paid just to
break even--and that's not counting the additional expense of
owning for those years versus renting, which brings us to our
What is the cost difference between renting and owning?
We're asking about the general level of rent in an area versus
the cost of buying and owning a home of similar size and function.
This varies around the country, and there might be places where
it will be cheaper to buy here and there, but this is rare. I
have seen cities where the cost of owning even a two-bedroom
home (loan payment, insurance, taxes, maintenance) was $500 more
than renting. When it reaches that extreme, it is usually better
to rent and bank the difference until a great deal comes along.
Do you like a lot of responsibility?
There is more to owning than renting, and most people don't
think about the responsibility involved. There are no big financial
surprises in a rental, because it is the landlords responsibility
to fix any major systems that fail. In your own home, on the
other hand, you can have a $3,000 surprise at any time, due to
a leak in the roof, a heater that fails, or wiring problems.
Are you ready for that? Are you ready for the regular mowing
of the lawn, trimming the bushes, fixing the toilet, and so on?
What do you really need?
Once you decide that you want to buy, this becomes one of
the most important home buying questions. When you have answered
it to your satisfaction, and if financial security is one of
your goals too, look for the lowest-cost home that will meet
your needs. It is easy to buy a home that is just a little more,
and a little bigger, and so have additional expenses that easily
add up to tens of thousands of dollars over the years. That's
money you could save for later in life, use for a business, or
for any other purpose. Stretching you budget to accommodate a
more expensive home also leaves you far more vulnerable when
tough times come.
What is the real cost of each home you look at?
It is too easy to focus on price alone as the "cost"
of a house, but the cost over time will include anticipated repairs,
taxes, insurance, utilities, and mortgage interest. You can even
consider the cost of commuting when looking at homes. After all,
a nice home far from town might mean as much as $100 more per
month added to your expenses.
Can the home meet your future needs?
This last of these home buying questions has to do with the
fact that family size and other factors change. If you are planning
to have children in the time you'll be living in the home, it
should either have the room necessary or you should know where
you'll be able to build an addition. If you are going to start
a home business, you should consider where your office or shipping
center will be. Don't buy too much home for the sake of possible
changes that aren't very likely. If you're not sure, just look
at the home in terms of whether and how it can be modified--if
those changes happen.
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