If you don’t ask yourself this question before you buy a home, you’re probably in for major regret

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Buying a home is often the biggest, most impactful purchase someone will make in their lifetime. And it’s not for everyone: Those who plan to move in less than five years, and those who don’t have much time for maintenance, are among the groups who may want to say no to buying. But for plenty of us it’s a rewarding, ultimately financially beneficial, move — especially considering that you can find some 15-year mortgage rates near 2% and some 30-year rates below 3%, as you can see here, which is still near historic lows (though most experts expect rates to rise in 2022). Still, here’s what to ask yourself before you buy.

1. Can I actually afford to own a home?

Jacob Channel, LendingTree’s senior economic analyst, says the biggest question homeowners should ask themselves is whether or not they can truly afford the home they’re thinking about buying. “As a rule of thumb, you should aim to keep your monthly housing costs less than or equal to about a third of your pre-tax monthly income,” says Channel. Total housing costs include the mortgage principal and interest payments plus insurance, taxes, utilities and any other expenses associated with the home. Other things to consider having money set aside for ongoing repair costs, which experts say should be about 1% of your home’s purchase price. “It can be very difficult to manage finances if you’re putting too many of your resources toward housing,” says Channel. 

2. And beyond that, do I have enough saved?

Whether you can afford the down payment, closing costs and monthly payments on a home, and whether you have enough saved beyond that to live your life, are two different questions. Indeed, in addition to housing costs, you should make sure you will have enough saved for moving expenses, upgrades and repairs, and an emergency fund. And, adds Greg McBride, chief financial analyst at Bankrate, remember that your emergency fund will “be needed more than ever once becoming a homeowner. A demonstrated track record of saving money is a good prerequisite to have for homeownership.”

3. Have I done the legwork to get a loan?

Have you done everything you can to raise your credit score? Can you easily get financial statements and other documents you’ll need to buy a home? If you think you’re ready, get quotes from 3-5 lenders, comparing not just interest rates but also terms and fees.

4. Am I ready to take responsibility for a home?

“Home ownership is a big commitment and if you’re not willing to put the time, money and energy into keeping your home in good shape, then homeownership might not be right for you,” says Channel.  Indeed, a 2021 survey from BusinessWire revealed that more than half of homeowners have made improvements to their property since the start of the pandemic, with 66% of homeowners spending more than $1,000 on improvements or repairs in the last year. And 76% of homeowners surveyed say they have at least one task they dread as a homeowner.

5. Do I plan to be in the home for 5 or more years?

“If not, you may not earn back the transaction costs involved in buying and selling,” says McBride. And Holden Lewis, home and mortgage expert at NerdWallet says, “Ask yourself if you’re ready to put down roots or if you’re at a point in your career where you might need to move within two or three years.”

6. Does this home fit into my future plan?

Think about where your life might be in a decade or more. Do you want children, would you like a place that might be easy to retire in? Then ask yourself: Does this home fit into that plan?

7. What are my must-haves, and what are my dealbreakers?

Make a list of requirements about what you don’t want to compromise on, and what you are OK with compromising on. The real estate market is competitive right now, and the last thing you want to do is get caught up in the frenzy and end up with a house that doesn’t truly work for you. 

8. Have I done my due diligence on the home and neighborhood?

Doing a deep dive on neighborhood safety, school district ratings, nearby parks, proximity to shops, restaurants, pharmacies and more can give you a better idea of what to expect in your prospective neighborhood.

9. Do I have the right realtor?

Justin Feil, realtor with The Feil Group in Los Angeles, says sellers are meticulous about selecting their listing agent but buyers are often very nonchalant about deciding which real estate agent will represent them on the purchase of their new home. “Big mistake! Why does it matter? When you finally see the house of your dreams pop up on your feed, remember, you and everyone else on planet earth are seeing it. At that point, you are literally at the base camp of Mount Everest. Now you have to get the house — obviously for the seller, money talks, but oftentimes these deals come down to not just money but terms, positioning, your agent’s relationships and so much more,” says Feil.