What Is the Most Important Thing to Consider When Buying a Home?

Future Plans

• Just because you have enough money to pay the mortgage payments on a home doesn't necessarily mean that buying one is a good idea. The value of a home generally rises over the long term but may stay steady or even fall in the short term. If you know that you will be moving within a couple of years, the costs associated with buying and selling real estate can cause you to lose money on your home investment. It may also take a long time to sell a home if the market is depressed, delaying your move.

Using a Real Estate Agent

• The decision to use a real estate agent depends heavily on your own knowledge of buying and selling real estate. Most people benefit from the professional advice and assistance of an agent, even though that help comes at a price. Be aware that as a buyer, you can retain the services of a real estate agent even if the seller is not using one. Who pays the fees for the agent or agents is negotiable between the home buyer and seller.

The Down Payment

• Even though you may be able to buy a home by only putting a small amount of money down, it's not always the best idea to do that. For personal financial health, always put at least 10 percent of the purchase price down. This reduces the risk of owing more on a home than it is worth if the market becomes depressed at the same time you need to sell the house.

The Financing

• Simpler is often better when it comes to mortgage terms. The future costs of adjustable-rate mortgages are impossible to predict -- they may go up if interest rates rise, or they may go down. While an adjustable-rate mortgage may work out in your favor, for peace of mind (and often for money savings), choose a fixed-rate mortgage with the shortest term you can afford. Although the monthly payments are higher, the total cost over the life of the loan of a 15-year fixed-rate mortgage is substantially lower than that of a 30-year mortgage because of the interest payments.