This is a very interesting topic, which is a popular questions, especially for first time homebuyers. I run into many young executives and engineers who recently graduated from college and have been working for several years at their first job, but know they will be switching companies at some point in the not-so-distant future. So they are in a situation where they can finally buy a house; they are financially sound, they have developed their credit, and are comfortable with the responsibilities of home ownership, but they aren’t sure if the act of buying a house makes sense if they may be relocating within the next few years.

And the advice I give them, or anyone else who plans to move within the next few years, is to ask a few simple questions. Number one: how sure are you that you will be relocating? If you are only thinking it is an option, or it is still an abstract notion, then purchasing a home may make sense; if the move never happens or doesn’t happen for 10 years, you will regret not buying. Number two: do you have any interest in owning rental properties? For many who relocate, the old home can become a rental property. This allows them to maintain a home in their current location, should they ever want to come back, but also allows them to create an income stream if they buy a good property for renting when they move. The last question is what will the cost be to buy and maintain the home, and what is the likelihood you will increase the home’s value?

This last question is usually the most relevant for prospective buyers. If you can buy a house at a good price, do some improvements over the next 3 years, increase the value, and sell for a profit, the profit can mitigate any closing costs, costs to maintain the property, and so on. But if you are planning to buy at the top of your budget, don’t want to do anything to increase the value, and stretch the value to win a bidding war, you may find yourself upside down if the market retraces. And that is not a comfortable place to be.

At the end of the day, the most important thing to do is run the numbers with a qualified mortgage professional who will help you assess your breakeven point in relation to rent vs. a mortgage and closing costs.

If you have any questions about buying a house or getting prequalified, please contact me. If you have anything to add about buying a house with plans to move, please leave a comment.