Are you on the fence about whether or not to purchase a house in your area or to continue to rent? While many people consider purchasing a home to be a long-term investment, there’s a whole lot more to the equation than whether the house purchase would create an asset or a liability for your family. Here are three important factors to consider when deciding whether or not it’s worth investing in a home:

How stable is your job?

If you’re a careful person, the first thing you need to ask yourself how stable your job is and whether or not you anticipate a career change in the near future. If you’re a part time or temporary staff member, investing your nest egg in a home may not be the smartest move. But if you’re established in a career with a regular income and you’re looking to build an asset, investing in a home may save you money over time while building an asset.

How long do you want to live in the area?

The cost-value analysis of renting or buying depends on a number of factors. How expensive is your rent? What rate are you able to finance your home under? For example, if I were to pay a monthly rent of $1400, buying would be better than renting if I planned to stay in that home for at least three years (assuming a home price of $180,000, a 10% downpayment, and a mortgage rate of 5.5%). But if that home were $300,000 under the same circumstances, it would take 12 years for it to be worth it!

If you have the numbers handy, use a mortgage calculator to estimate of how long you’d need to stay in a home before it was saving you money to buy it.

If, on the other hand, you’re open to relocating to pursue a relationship or a job farther from home, renting is a better choice. You may pay the same amount on a monthly basis, but you’ll avoid the one-time fees and the stress of putting a home on the market to resell.

Could you afford to keep the house if you had to move?

A great way to determine if you’re ready to purchase a house is to ask yourself what you’d do if you needed to move quickly and the house couldn’t be sold or rented. Emergencies happen — you may need to relocate to help care for a family member, or accept an opportunity abroad that’s too good to say no to. In these scenarios, it will pay off if you consider your Plan B ahead of time. Purchasing a home in a price range that you could afford even if you needed to relocate would be the safest choice.

Are you on the fence about renting or buying a home? What do you think is the most important factor to consider?

I grew up living in the suburbs and the suburbs are where I still reside with my family. Especially while we’re just starting out in life I like what the suburbs offer. I have a nice, kid-friendly community, good schools, access to all amenities and close to friends and neighbors. These are all reasons that attracted me to consciously buying here myself, but there are a few drawbacks as well. For me, and this is no surprise, the biggest drawback is:

The Commute.

Image via Travis Isaac on Flickr

Commuting is a part of my life. I first started commuting when I was still living at my mom’s house as a young adult. I did it for many years during university, where for my entire undergraduate degree, I relied on a combination of my mom, friends and public transit to get me around. I usually had access to my moms vehicle on weekends and after class, and was within walking distance to my job, so it worked. For four years I got away with not needing a vehicle of my own. By the time I started my second degree though, my schedule was too demanding and using public transit wasn’t working. I bought my first car for $750 and drove it for three years with very little money going into it beyond regular maintenance. I lucked out with that old Corolla.

When my husband and I got our first apartment together, I made the decision to sell my little car for $800. Did we really need two cars? With my husband’s then crazy travel schedule, usually driving, we really could have benefited from two vehicles but we made it work. It helped that we had many friends and family that were around to help me when he was away.

Many years later, we’re slowly approaching a ”should we get a second car?” bridge.

Both my husband and I commute to work. We’re a one car family and because of our work locations we had to decide when we bought this house (in the ‘burbs) if we buy a second car or me rely on public transit. Given that I work during peak hours I can commute via public transit fairly efficiently. It does require a drop-off and pick-up spot from my husband but we make it work, for now. There are many days I wish I could just hop in my own car and drive to work but then am quickly reminded about everything else I’d have to deal with. The stress of driving in rush hour traffic, the cost or parking, the gas, the associated costs of owning a second vehicle…the list goes on. Until we absolutely have to, and I know we will eventually get there as our family grows, we will maintain our one vehicle household.

We will never live in the city. If anything, we will move further out in the suburbs or country. Somewhere I can feel safe yet not see my neighbors. Somewhere where we will absolutely need two vehicles as long as we maintain the jobs that we currently have. Living in the suburbs has many advantages but one big disadvantage, for us at least, is the commute. I think this is a situation where the pros much outweigh the cons. I’d much rather have our house, land, school zones and amenities with a commute than less space for my money, busy streets and no yard.

The suburbs aren’t for everyone that’s for sure but for me, I love it. I can’t imagine calling any other place home. Even if it takes me an hour to get to work.

Do you commute to work? Would you get a second vehicle if it meant saving 45 total minutes every day?

Via Flickr – Bistrosavage

1.     Find someone that is knowledgeable and reputable to represent you. Not only will you be working with person frequently but you are going to need to have a good relationship with your broker and agent.

2.     Before ever placing an offer on a property you obviously want to do your due diligence. This not only includes visiting the property, but a number of other things. You definitely want to get a copy of the plat for the property and walk the boundaries of the property. While walking the boundaries of the property you should be on the lookout for any types of encroachments. If the boundaries of the land are unclear, you may need to pay for a survey before placing an offer.

3.     It is always advisable to read all of the fine print, but more specifically, you should pay particular attention to the Seller’s Disclosure. Typically you receive this within five days of mutual acceptance of the Purchase and Sale Agreement. It is important to read this thoroughly as it is the case that you get your deposit back within three days if you read something that is not agreeable to you.

4.     The best investment you can make before closing on a home is the building inspection. You do not want to skimp on the quality of the inspector and make sure that they come with good references and qualifications. There is an extent to which the building inspector can examine the home so just because the house gets a clean bill of health that does not mean that there are no problems. It will however bring to the surface any issues that may not be evident to the naked eye. If this is the case, you will want to determine how much damage is done by an individual specialist so that there are no surprises later on.

5.     You need to make sure that the building is up to code and that all proper permits have been obtained for any improvements that may have been made on the structure. If proper permits were not acquired, you are liable for any fines or other repercussions that may come from not having one after you own the home.

6.     Another important document that you should read diligently is the Preliminary Title Commitment. You usually receive a copy of this no more than ten days after the creation of the Purchase and Sale Agreement. If not, you will need to request this documentation. There should be separate documentation for easements, covenants, as well as any other agreements associated with the property. Important things to look out for are exclusions, as they are items that are not covered by the policy. In these instances, you can acquire additional coverage. If this is the case you will need to have a survey as well.

7.     The terms of your financing are of particular importance. Even before you arrive at your closing, you should have reviewed all of your documents to ensure that everything is in order for the big day. You should never rely on the word of somebody. Make sure that everything is in written form and do not hesitate to seek advice from professionals, even if it comes at an expense. Performing the necessary actions before you buy will ensure that you are not met with any surprises down the road. Not to mention, you have a lot of leverage at the point in the game whereas after you own the house there is probably no going back.

Although buying a home can be a stressful and trying time, it is an event that is also extremely exciting. Regardless of how little experience you have in buying homes, it is a process that can be quickly learned if you are diligent in finding a good home for yourself.

With that being said, take it to be a learning experience and seek out knowledge whenever possible. It may seem troublesome in the short term but in the long term it will pay off with a house that you can truly enjoy.