It's More Than a Mortgage

A Guide to Deciding When to Buy That First House

For Marc Laplante and his partner, Mitchell Keiver, the decision to buy a house wasn't simple.

They were making plenty of money and had been together for four years, but work stability was still a concern. They are both Canadian nationals, so they weren't sure how long they would be in this area.

But when Keiver, 34, found a great job in Washington, "we realized we were going to be here for quite a while," said Laplante, 31.

So they started shopping.

The decision about whether to buy a first home is a complex one. If you're considering that step, experts say, you should take into account the overall state of your finances, how well you understand the process and even the stability of your romantic life.

Buying a home takes money, obviously. Besides the down payment, buyers can expect to pay thousands of dollars in closing costs. There are also significant costs associated with selling, so financial planners generally advise people to avoid buying if they don't plan to stay for a while.

Karen P. Schaeffer, a financial planner in Rockville, said she advises clients not to buy unless they see themselves in the house for at least five years. "If your job isn't settled, please don't buy," she said. "I don't want you to lose a job opportunity" over a house.

Although you can't predict the future, she said, people generally come to a point in their lives when they want to settle somewhere for a while. "It may be for the schools, for the community, or just because they don't want to move again."

Look at the likely scenarios for your life in the next few years, she said, and evaluate the odds that the place will still work for you under those circumstances.

And it shouldn't take an exotic mortgage to pay for your home, she said. "I'm a really huge fan of fairly conventional financing," especially after seeing how so many people got into trouble with other types of loans in the past few years. A buyer considering an alternative loan, such as one with an interest-only payment or an adjustable rate, should "try out the worst-case scenario" and see if the budget can handle it, she said.

Laplante and Keiver set up a spreadsheet, plugging in all the variables of their finances to come up with a sales prices they could comfortably pay. "We could have afforded more, but we didn't want to be house-rich and cash-poor," Laplante said.

As would be-buyers prepare a budget, they shouldn't neglect the other expenses often associated with moving, such as new window treatments and furniture, Schaeffer said. "Making it livable and making it yours is all part of why you want to buy."