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 next question...

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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