5 Questions to Ask Before Buying a House When You Might Not Stay

You're no house flipper. Conventional wisdom says you should plan to keep your house for at least five years before selling. Any less, and you'll lose all kinds of money. Or so they say.

While that may be true in some cases, it’s worth looking at your situation separately.

No two home purchases are alike, and there are situations in which buying a home you might not occupy for more than five years is a fine idea. Start by asking yourself these five questions.

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What is the recent history of home values in the area you’re considering?

You certainly can’t predict the market with 100 percent accuracy, but if values of homes similar to the one you’re considering have gone up steadily or at least maintained their value, you aren’t taking as big of a risk.

Would you consider an adjustable rate mortgage?

In the short run, an ARM can offer you a lower interest rate.

If the adjustment period is at least as long as you think you’ll be staying in the house, you could get an ARM with no risk of a higher interest rate. Just know that if you decide not to sell at the end of the adjustment period, you may end up with a higher rate.

What’s the rental market like in the area?

If the home you’re considering would be one people would be likely to rent in your area, you might not have to rush to sell after you move.

Look into the rates of occupancy in your area and what similar homes rent for in that market. You might make a great landlord.

Can you lower the closing costs by negotiating?

Closing costs are one of the main things that lead homeowners who sell too soon to lose money on the deal. A lot of lenders and closing attorneys will let you negotiate those costs, so definitely ask.

Can you put at least 20 percent down on your house?

Can you make extra payments on your mortgage?

If you are able to make a larger down payment, you can avoid paying private mortgage insurance (PMI). If you make extra payments over the life of your mortgage, you’ll build equity and reduce your risk of being underwater after a short time.

On the other hand, some people advocate paying as little as possible when you’ll only be there a short time, and keeping the money in your pocket. This is a great plan, if you plan to invest that money and earn a decent rate of return, but not if you plan to spend it on extras.

Have you ever broken the five-year rule? Would you?