What should I buy?

The old saying for a business ("location, location, location") rings true for a home, too. Trying to decide what type of home to buy is an important step, but deciding where to buy can have even greater long-term implications.

When searching for your new home, you need to look at what is important to you and your family. Do you want a quiet street with little traffic and mature trees, or do you like the noise and activity of the big city? Do you need to be close to schools; do you like to walk to local shops, or do you prefer driving to the mall? How far is your commute to work every day? All these issues are important things to consider before you even begin your search for a new home.

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Buying a home is a long-term investment, so try to find something you and your family can grow into. If you purchase a home that will only suit your needs for a year or two you will probably end up losing money once you factor in the transaction costs of buying and selling real estate.

Don't fall into the trap of falling in love with a house, without paying attention to its surroundings. How busy is the street it's on? Will there be any future development in the area? Does the community have the amenities that are important to you?

One Toronto developer built a small subdivision right across from a slaughterhouse. Shortly after moving in, the new residents started complaining about the smells and noises coming from the slaughterhouse, which had been in the same location for many decades. They are finally discovering why those new homes were so inexpensive.

A good rule of thumb is to try and buy the worst home on the best street you can afford. This may not work for everyone, but if you don't mind getting your hands dirty and can swing a hammer, you will usually be justly rewarded for your efforts.

If you prefer buying a new home that requires little or no work, you need to pay special attention to your surroundings. Trying to picture a community that is currently empty fields and mud is not an easy task. You need to know what is being built on that vacant lot beside yours.

Will it be a new school, a convenience store or maybe a gas station? Were you looking forward to sitting on your new porch and looking at the new hydro vault located just six feet from your front steps? Don't rely on what the sales rep is telling you; do your homework and find out what your new community is going to look like.

Some communities are growing out of control and don't have a handle on the infrastructure needed to deal with their new inhabitants. A friend of mine recently bought a new home in Brampton, Ont., and was trying to find out where her five-year-old daughter would go to school in September. The school board told her to, "just put your daughter on the school bus."

They still were not sure what school she would be going to because the new school in the area was still not completed. She literally had to follow the school bus in her car to figure out what school her daughter was going to.

Deciding what to buy is really a matter of buying the most house for the price you can afford in the community you want to live in. Inevitably there are trade-offs, but if you can get the right mix and remember that it's all about location, location, location, you will do just fine.

Andy MacDonald (BA Econ.) is president of MortgageBroker Inc. He has more than two decades of financial services experience and has long been an advocate for consumers within the mortgage industry. Visit his Web site at MortgagesInCanada.com.