Learn How To Start Investing In Real Estate
Learn How To Start Investing In Real Estate

5 Factors To Consider When Buying A House

Written by Than Merrill

Key Takeaways

  • There are several things to consider when buying a home for the first time, including your mental and financial readiness.
  • By looking out for tell-tale signs, home buyers can save themselves from costly surprises.
  • There are several factors to consider when buying a home, including your duration of stay and job security.

When mulling over what to consider when buying a house, there are a myriad of factors to consider. For starters, American economists have scrutinized mortgage interest rates ever since the housing recovery started to gain traction. For example, when it came to buying a home in 2015, experts predicted that mortgage rates would surpass five percent, yet interest rates remained below four percent. While higher than what we had become accustomed to, that was still historically low at the time. Nevertheless, low interest rates have helped many prospective homeowners actively participate in the housing market. Some people have even made the move from renting to owning in fear of future rate increases. While not a bad idea, interest rates are just one of many factors that go into deciding whether or not to purchase a home. Interest rates are by no means the only factor that should determine when you are ready to buy a home.

According to Casey Fleming, published author and mortgage broker, “Small changes in interest rates don’t make large changes in your payment.” While fluctuations in rates could change monthly premiums, they should not be viewed as the most important factor when purchasing a home. There are simply too many factors to say that one stands above the rest. Yes: mortgage rates are very important, but don’t make a purchase based solely on the rate you can get.

What Should I Know As A First Time Home Buyer?

As a first time home buyer, you should know some things to consider when buying a home. For example, you may be wondering how to prepare yourself mentally and financially, and what exactly to look for. Buying your first home is a big decision, not to mention a big financial investment, that can impact your life in a big way. To help you prepare as much as possible, the following sections entail a list of things to consider when buying a house, especially for those doing so for the very first time.

First Time Home Buyer Tips: How Do I Prepare To Buy My First Home?

If you’re a first time home buyer, then you’ll need all the help you can get to identify the important things to consider when buying a house. The following are some of the most pertinent first time home buyer tips:


  • Make sure buying makes more sense than renting: Although buying a home has been highly regarded as an indicator of success or achievement in our society, buying does not necessarily make sense for everyone. Especially in some expensive markets, renting may be more beneficial for cash flow. Be sure to gauge the financial advantages and disadvantages of buying versus renting before taking the plunge.



  • Double-check that your finances are in order: Mortgage lenders have tough requirements for home buyers, including solid credit scores, proof of steady income, and a down payment. It may be helpful to sit down with a lender to find out what type of mortgage you would qualify for, or what steps you need to take to get there.



  • Calculate how much house you can afford: Saving up for a down payment is a feat in itself, but it is important to know how for your down payment will get you relative to a purchase price and the monthly mortgage payment.



  • Get to know all the costs and fees: In addition to a down payment, be sure to familiarize yourself with all the costs and fees associated with purchasing a home, including taxes, insurance, earnest money and closing costs.



  • Look into first-time home buyer programs: There are several government-sponsored home buyer programs, including federally-backed loans, state, and local-level programs. These programs often assist with the purchase price or the down payment, thus removing some barriers for first-time home buyers.


Things to consider when buying a house

What Are Closing Costs On A House?

Closing costs on a house typically range between 2 to 5 percent of the purchase price, according to For example, if the purchase price of your property is $250,000, you can expect to pay somewhere between $5,000 and $12,500. Closing costs on a house general cover various taxes and fees from attorneys, lenders, inspectors, and insurance companies.

What Should You Look Out For When Buying A House?

When buying a house, be sure to look out closely for any signs of trouble that can be costly in the future. There is nothing worse than finally moving into the house of your dreams, only to have structural problems spring up on you left and right. Some updates and repairs are to be expected, but there are several costly features around a property that should be considered dealbreakers. Here are some things to look out for when looking at a potential property:


  • A roof that is falling apart: Roof repairs are notoriously expensive, and visible issues should be a red flag. Look for a new, sturdy roof that can help your insurance rate and protect against weather conditions.



  • Questionable structure: Sellers will do their best to update the home with new paint and decor, but don’t be fooled. Pay close attention to the actual structure of the home to make sure it’s in good condition.



  • Old HVAC systems: Pay attention and ask questions about heating and cooling systems in the home. Inefficient units can eat up your utility budget, while fixing and replacing units can be expensive.



  • Suspicious plumbing: Don’t be afraid to look under sinks and examine pipes and plumbing. A full inspection can help with this, but even novices can detect bad odors, leaks and mold.



  • Shoddy exterior: House hunters should pay just as much attention to the exterior of the home. Look at fencing, driveways, and landscaping in case you detect any costly issues. The last thing you want is to deal with tree roots or replacing a fence shortly after you’ve moved in.



  • Touch test failure: When you are looking at a property, don’t be shy to get handsy. Test out every knob, switch, faucet, window and doorway to make sure everything is in working order. Pointing issues out may even encourage the seller to get them fixed in order to sell the property.


5 Factors To Consider When Buying A Home

Again, there are other factors to when determine what to consider when buying a house. While interest rates may be important, they are not the only factor to consider. That said; the following highlights several things to consider when buying a home:


  • Duration Of Stay: While often overlooked, the amount of time you plan to spend in the home is one of the most important factors to consider when buying. Essentially, does the duration of stay make it more economical to buy than rent? Of course, there is no simple answer for such a generic question. Each market is different, and will require a subsequent analysis to determine if buying is the right choice. That said; it is entirely possible to predict whether or not the time you plan to spend in the house warrants its purchase. “On average, it takes four to seven years to break even on a home, where you’ve got enough appreciation where it can pay you back for the cost of the transaction and cost of ownership,” Fleming says. “If you’re thinking about buying a home, selling it in two years and think it’s going to be cheaper than renting, it’s very unlikely to be.”



  • Job Security: The expansion of the economy can improve employer sentiment. However, that does not mean that job security doesn’t weigh on the minds of those that are fortunate enough to be working. How could it not? We are still recovering from one of the worst recessions in American history. Trepidation abounds. Having said that, the last thing you want to think of when buying a home is job security. Uncertainty will almost certainly ruin any prospects of buying a home. There is perhaps nothing worse then buying a home, only to discover that you are unemployed shortly after. So before you make a 30-year commitment to mortgage premiums, make sure you are secure in your employment position.



  • Down Payment: The down payment on a purchase remains one of the biggest obstacles in the way of potential buyers. Millennials, in particular, have found it difficult to save up a lump sum of money. Not only did the millennial generation graduate from college during one of the worst recessions in American history, but they are also saddled with student loan debt. If that wasn’t enough, underwritings have become more difficult to work with and rents have made it utterly impossible to save up enough money for a down payment. In a move to make down payments more “affordable,” both Fannie Mae and Freddie Mac have announced that they intend to back loans with down payments as low as three percent. Moreover, the Federal Housing Administration (FHA) is planning to drop the premiums owed on mortgage insurance. The move could make owning a home much more affordable for buyers.



  • Emotional State: As simple as it may sound, the emotional state of a buyer is particularly import during the process of buying a home. That said; homeownership is not for everyone. Buying a home is a huge commitment that not everyone is ready to sign up for. There are those who still wish to travel the world or find their dream careers. Perhaps even more importantly, owning a home comes with additional responsibilities: responsibilities that not everyone wants to deal with. “Your life changes a great deal when you go from being a renter to an owner,” Fleming says. “When things break, it’s your responsibility to fix them, not the landlord’s.”



  • Local Market Indicators: As frustrating as it may be, one of the largest factors to consider when buying a house is something you have no control over: the local market. When it comes down to it, you may not even be given any options. The market you are interested in may not have nay homes in your price range, or in the right location. On top of that, some market values dictate whether or not owning is even a viable option. While it is becoming cheaper to own than rent in some markets, there are those where renting is justifiable. It all depends on the current state of the particular market you are interested in. So while interest rates are important, it is equally important to own in the right market.


When you feel like you’re ready to become a homeowner, it is important to pinpoint what to consider when buying a house. As we discussed, there are several factors to consider, such as your personal readiness, local market conditions, and making sure you know important components of the home buying process. By giving some of these questions careful consideration, you’ll be sure to have awareness and mindfulness as you dive into the realm of home ownership.

Have you ever had any hesitations around buying a home? If so, how did you address them? Feel free to share in the comments below: