How to Decide Where to Buy Your Home

Oct 23, 2019 | Mortgage


Did you know that the second most common reason for selling a home is that the owner bought the wrong one in the first place? Knowing how to choose the right home, and where it should be, are critical to achieving life goals and financial goals. In this article we will help you make the right decisions about where to buy a home.

What Type of Home Are You Buying?

This decision is the first one to make. There are different types of home such as single family, townhome, condo, co-operative. But “where” is a powerful factor for buying the right home. Unfortunately it is so obvious many people ignore it. Do not ignore it. Are you buying:

  • Your first home?
  • Your dream home?
  • A vacation home?
  • A future investment property?

Let’s discuss why you must be clear about this and why it is so important when it comes to choosing where to buy.

Your First Home

Your first ring on the ladder to achieving the American Dream. How long are you likely to live here? If you see it as primarily “a first step” and you intend renting it out or selling it in a few years to buy “your dream home” then where you should buy can be brought down to a series of very practical decisions:

  • How long are you prepared to spend getting to work every day? Do you need to be close to public transport, inner city bicycle lanes, easy through-routes, or major highways?
  • How close do you need to be to shopping, hiking spaces, public parks, major malls, etc.?
  • When you aren’t at work what do you do, and how important is getting there and back?
  • If you will live alone and have decently high energy levels, these questions may be less important. But if you have a family, they should be part of the discussion and decision-making. They have to get places too.
  • How long do you intend living there? If you answered “as short a time as possible” then “where you buy” may be angled more towards buying in an up-and-coming area where home prices should rise enough to provide a good deposit on your next home.

There are no guarantees on home prices, of course, but in the 47 states we serve, some cities and some suburban areas are expected to grow quite substantially in the next few years. So ask yourself, which is more important – the first few questions or the last one? Is day-to-day living more important or is equity growth more important?

Your Dream Home

If you are buying a home which you intend to “live in forever” then speedy equity growth over the next two or three years may be less important than lifestyle issues. So:

  • Check out the commuting and after work questions above.
  • How old are you now and how old will you be in ten or twenty years? How important do you think outside interests, social groups, sports, hobbies, etc. will be when you can really enjoy living your dream in your dream home?
  • Based on that thought, should you buy in a community that has or is close to the kind of facilities you will spend so much of your time enjoying?
  • If you will buy in a lifestyle community, check out the HOA finances. Be sure the clubhouse, golf course, pool, tennis courts, etc. have sufficient reserves to ensure they stay open, up to date, and enjoyable. If you have the choice of two communities, you may decide to buy in the one where you can be more certain of living your long-term dream.

A Vacation Home

Deciding where to buy this kind of home is easier. You know the area well, you have probably looked around during your vacations. Some questions, above, still impact your decision.

  • If you intend renting out the property when you are not there, give some thought as to what will attract short-term renters and how close should the property be to those attractions. You may just want extra income, or you may need the income to cover some of the mortgage, so “where” is important.
  • One critically important element, if you will rent, is can you? Some cities, condo communities, and subdivisions do not allow short-term renters. So, if 30 or 90 days is a minimum rental period, decide if that matters.

A Future Investment Property

You may see your first home or vacation home as a future investment property. Decide who your likely tenants will be and think about where is the best location to get the future tenants you will rent to.

Financing Your Home

This factor may also impact where you decide to buy.

  • Will you get an FHA mortgage? If so the home must be your primary residence and must be within the approved distance from your place of employment. FHA also has some rules about the size of mortgage that apply to certain areas. Some states offer benefits to homeowners who buy in a certain location. HUD is also expected to announce new rules on condo mortgages. Those new rules may enable you to buy a unit in a condo development that was previously off-limits to you. So discuss all possible options with your loan officer.
  • If you intend using the property as a rental in a few years, should you apply for a conventional loan to begin with or will it be worth refinancing from FHA or VA when you move out?
  • If you intend selling your first home, in a few years to move to your dream home, should you get a 30 year fixed mortgage or a 3, 5, or 7 Year ARM?

The Takeaway

Buying the right home in the right location takes thinking about, and this article will help you make the right decisions. Getting the right finance is also important, so please click here to get started or click here to talk with one of our loan specialists.