How much money do you have?
Houses are expensive to maintain, but they also have the potential to become a liability if the housing market trends downwards. Do you have the ability to absorb a 10-15% loss on your home’s value, or are you prepared to be stuck in that home until you recover that 10-15% loss plus an additional 6% in realtor fees? Noting that on a 4% 30 year loan, it will take you roughly 8 years to recover 16%, to break-even.
Imagine how many young people with virtually nothing to their names purchased in 2006 and 2007 and are now 10%, 15%, 20%, or 30% under on the mortgage. When you are young with a low amount of liquid assets, taking a hit can be life altering.
How much is being mobile worth to you?
How secure is your job? Do you think you will want to be at your job for the foreseeable future? If there is uncertainty of your job, there most certainly is added uncertainty for owning real estate. Is there a chance that there will be a more lucrative opportunity for you elsewhere?
How is your relationship with your boyfriend/girlfriend/wife/husband?
Your relationship needs to be solid before investing in real estate. Real estate typically is one more problem to deal with in a break-up and/or divorce. Your housing needs may abruptly. Make sure you are on the same page or be prepared to live with the outcome.
Will your “starter home” last at least 5 years with the option to go 10+years?
I personally view 5 years as a break-even indicator. If you can’t make it 5 years, then you are probably going to take a hit when it comes time to sell. Be certain that the home or real estate option you are considering will meet your needs long enough to be viable.
What tax benefit would I get from owning a home?
Be sure you understand the actual net tax benefit, often it is over-estimated how much a house actually saves you in a given year.
How much work does the home need?
The more work a house needs, the more liquid assets you need to have or you need to be prepare to live with those issues.