5 Considerations Before Buying a House

The commonly stated motto for real estate is "location, location, location." However, when buying your first home, (absent already being wealthy) affordability is more important. I am not suggesting that you sacrifice yours and your family's safety or expectations by moving into a dangerous neighborhood, however, if you cannot afford an added luxury (for example, living on a golf course) you should not try to squeeze it into your budget.

(1) Purpose

Know why you are buying a home. If you are buying a home to live in, your standards should be different than if you are buying an investment property. If purchasing to live, you should like the "feel" of the home. You should feel comfortable there and like the floor plan. If purchasing for an investment, the only thing you should be concerned with is whether it needs a lot of work or will be hard to rent out (depending on your investment strategy).

(2) Location

As I stated above, you do not want to move into a dangerous neighborhood because the homes are extremely affordable, however, you should also not move to a rich neighborhood just because the neighborhood is "rich." Assess your situation and see what location is best for your. For example, if you have children, you might want to buy a home in a location that is zoned for a great school. Pick your location based on your situation and not on economic perception.

(3) Price

One of the main reasons that people lose their home is because they finance more home then they can afford. Stick within your price range! Biting off more than you can chew (as far as price is concerned) may work if the money crunch lasts only a couple of months. However, when you take a loan that normally spans 30 years (360 months), be aware that constantly struggling to pay your mortgage will take a huge toll on you.

(4) Mortgage Rate