If you're a renter and thinking about purchasing a home, there are several things to consider:

How long do you plan on living in the home?
If you purchase a home and then get a job transfer or decide to move after only a short time, you may end up paying money in order to sell it. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home.

The length of time that it will take to cover those costs depends on various economic factors in the area of the home. Most parts of the country have an average of five percent appreciation per year. In this case, you should plan on staying in your home at least three to four years to cover buying and selling costs. If the area where you buy your home experiences an economic upturn, the length of the time to cover these costs could be shortened, and vice versa.

How long will the home meet your needs?
What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you'll need to ensure that the home has what you'll need. For example, a two-bedroom dwelling may be perfect for a young couple with no children. However, if they start a family, they could quickly outgrow the space. Therefore, they should consider a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you'll need will help you find a home that will satisfy you for years to come.

How is your financial health, including your credit?
Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can almost always find a lender to lend you money, solid lenders are more skeptical if your credit history is not so good. Generally, a couple of blemishes on a credit report won't affect you that much and you will be considered a good credit risk, qualifying for lower interest rates. If you have more than a couple of blemishes on your report, lenders like Quicken Loans may still provide you with a loan, but you may just have to pay a higher interest rate and fees.

Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. Another school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. This is a decision only you can make. Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching yourself financially? Make sure that whatever you do, it's within your comfort zone.

To determine how much home you can afford, go online and use a home affordability calculator. It will give you a range of what you may qualify for. While some may say that the "28/36" rule applies, in today's home mortgage market, lenders are making loans customized to a particular person's situation. The "28/36" rule means that your monthly housing costs can't exceed 28 percent of your income and your total debt load can't exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential and other factors, lenders can push the ratios up to 40-60% or higher. While we're not advocating you purchase a home utilizing the higher ratios, its important for you to know your options.

Where will the money for the transaction come from?
Typically, homebuyers will need some money for the down payment and closing costs. However, with today's broad range of loan options, having a lot of money saved for a down payment is not always necessary, if you can prove that you are a good financial risk to a lender. If your credit isn't stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender.

Do you know about the ongoing costs of home ownership?
Maintenance, improvements, taxes and insurance are all costs that are added to a monthly house payment. If you buy a condominium or a town home, in certain communities a monthly homeowner's association fee might be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your realtor and your lender aware of your desire to limit these costs.

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