The Most Important Things To Consider When Buying A Home

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When mulling over the things consider when buying a home, the process can become increasingly daunting. There are, after all, a lot of things to consider when buying a home. For starters, American economists have scrutinized mortgage interest rates ever since the housing recovery started to gain traction. 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 out of fear of future rate increases. While not inconsequential, interest rates are just one of the many factors to consider when buying a house. 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 things to consider when buying a house to narrow down your own criteria to one or two factors.

What To Consider When Buying A House

Whether you are a first-time homebuyer or a seasoned investor, here are some of the most important things to consider when buying a home:

  • Duration of stay

  • Job security

  • Down payment

  • Emotional state

  • Local market indicators

  • Seller’s incentive

  • Age of the house

  • Mortgage rates

  • Supply and demand

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things to consider when buying a house

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 Status

As simple as it may sound, the emotional state of a buyer is particularly important 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.

Seller’s Incentive

One factor to consider when buying a house is that some sellers are more motivated than others while some are more apathetic to whether their house sells or not. It’s common for some sellers to place their homes on the market but are not looking for a quick sale. These homeowners are happy to continue living in their homes for the time being. In effect, there may not be much room for price negotiation. On the other hand, a seller may be highly motivated. This may be due to an estate sale, a sudden need to move out such as a job relocation, or someone looking to pay off one of their mortgages with another. Consult your realtor to determine the motivations a seller may have and how to properly counteroffer and negotiate.

Age Of The House

If you are not looking to renovate, some houses that meet all your requirements may have been built several decades ago. A factor to consider when buying a house is the age of the property. An older home may have its own certain charm and appeal, but in turn may need more upgrades, repairs, and improvements. If you are interested in an older home, make sure you have the time and budget for renovation projects. Building codes are also a thing to consider when buying an older house. Codes may have changed over the years so having a basic understanding of the building laws then and now can help you get a better understanding of the state of the house. Consult your realtor as they may have the knowledge of the state of house or where to find the information.

Mortgage Rates

Many people expect mortgage and interest rates to raise in 2018 as the Federal Reserve continues to tighten its monetary policy and make moves towards decreasing its balance sheet. However, this prediction has been spiraling through the real estate industry since late 2016, which makes it difficult to know if and when a notable hike will occur. Over the past year or so, mortgage rates have hovered between 3.9 and 4.5 percent—a less than significant increase. Some experts hypothesize that rates will hit five percent by the second half of 2018, but there has been no official confirmation one way or the other. One thing is for certain, buying a home at the beginning of 2018 will ensure homeowners a locked in low rate compared to decades past.

Supply And Demand

Because home prices have been appreciating, many hopeful buyers are finding it difficult to make a purchase within their financial reach. Even current homeowners are opting out of buying newer, bigger, better homes—trading up, if you will—for the same reason. This is making it even more difficult for first time buyers because the supply of starter homes is less than ever before. The increase of both rent and home prices mixed with stagnant wages for many is leading to the combination of high demand and low supply. While this may make it harder for first time homebuyers, investors who own passive income properties should benefit from the current state of the market.

things to consider when buying a house


When you feel like you’re ready to become a homeowner, it is important to pinpoint the most important things 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 the 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 homeownership.

Do you know what to consider before buying a house? Important things when buying a house are different for everyone, which begs the question: Can you pinpoint what is most important to you? Please feel free to let us know what means the most to you in the comments below.

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Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies
Real Estate Investing Strategies