To many, the American Dream is having your own home and a plot of land that you can call your own. However, buying a home is not as easy as walking into a store and buying a bottle of soda. There are some important things to look out for – read on to find out more.

1. Sort out the finances

First things first, make sure you put your finances in order before you start looking. Talk to a bank or a mortgage advisor in order to determine what your maximum pre-approved amount is. This will set the scene for the rest of the house purchasing process – it sets the ceiling in terms of price, and it sets the boundaries of the type of house you will be able to purchase. For example, there is no point looking for a luxury condo in Manhattan when your finances allow for a house in the suburbs.

There are many factors that a lending institution will look at when considering how much to lend – your credit score, debt to income ratio, liquidity, job stability and income. Before making an application for pre-approval, it may pay to see a financial advisor to see what you can do to improve your financial standing to maximize the loan amount you can be pre-approved for.

2. Location, location, location

When buying a home, think about its location in relation to where you are in your life. Do you have kids? You may want to look at a home in a great local school district. Are you a commuter? You may want to be close to public transport to avoid long, unnecessary commutes. The geographic location of a home is just as important as the amenities inside it.

3. Amenities

What is inside the home is also important. What features does it have, and do they suit your lifestyle? Can the house adapt to your changing lifestyle, for example, if you decide to have kids and need extra bedrooms?

A good principle to follow is that it is better to purchase a house with more amenities than you need, as adding to a house can be a time consuming and costly affair.

4. Seek professional advice

There are many legal requirements you need to meet when purchasing a home – title registration and transfer, conveyancing, tax obligations and local council compliance just to name a few. To help you navigate through this maze, enlist a lawyer or real estate agent early on in the process. They can help you get things right the first time, which can save you a lot of time, money and heartache later on down the track.

5. Don’t rush into buying

Buying a house is a big commitment, and it is a commitment that stays with you for a long time. Therefore, it pays to think very carefully about whether purchasing a house is the right thing for you at your current stage in your life. There is no one ‘right’ time to purchase – every person is unique in their professional, financial and personal circumstances and the right time will vary accordingly.

If you are not sure about a particular neighborhood, consider renting as a test drive – you can see the pros and cons of living in a particular area without the long-term commitment.