It starts innocently enough...
you pass a house in a neighborhood you like, you hear someone is selling their
home, you happen to look up home prices online. Before you know it, you’re
knee-deep in home shopping and open house visits. This can actually be exceedingly
dangerous to your financial future.
Falling in love with a home
before you actually know what you want in a home is risky. To avoid the “buy
first, think later” syndrome that burdens family finances, marriages, and work
life, ask yourself these important questions:
1. How much do we
want to spend each month on home expenses? There’s a
tendency for people who shop first to try and “make the math work” on
purchasing a home. Often this leads to stretching the home budget and ignoring
crucial expenses such as maintenance and property taxes in order to “make the
mortgage.” Determine a comfortable, conservative range for home expenses first.
2. Which
neighborhoods make sense from multiple angles? You
may love a neighborhood for its leafy streets and family-friendly atmosphere,
but what if it adds thirty minutes to your commute? Are the schools good? What
are the crime stats like? What’s the walkability score? Don’t view a
neighborhood with rose-colored glasses based on a single quality you like.
3. What’s a
priority and what’s a nice extra? You may
think you want extra bedrooms for guests and a home office, but which one is
more important? Rank the must haves against the “nice to haves.”
4. What’s our
long-term ownership picture look like? Are you
settling in for ten years, or do you suspect you’ll need to move in four? While
you can’t predict the future, you can make some estimates. Those estimates will
help you understand how much home you should buy, what kind of down-payment
you’ll want to have, and what the picture might look like in terms of
renovations.
5. When can you move
vs. when would you like to move? Rental leases,
selling your current home, and job and schooling factors all impact the
timeline for a purchase. Wrap your head around the pragmatic timeline as best
you can.
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