Homeownership is valued and is a persistent trend for myriad reasons. A stable cost of living and the freedom to make any changes you want are nearly priceless for some, but in the push to buy, have you stopped to decide what is driving you personally into homeownership in the first place? Before you make an offer, take some time to consider the reasons you're looking to buy a home. Calling “time out” and evaluating your personal goals is key to making sure you don't wind up with buyer's remorse.
Six Top Reasons For Buying A Home
Prioritize the following list to clarify exactly why you are buying real estate:
- To Gain More Living Space.
Has your family expanded or are you launching a home-based venture? Or, do you just love the idea of room to spread out, inside and outside? Space costs money, so if you want to keep costs down, smaller is better. How have you arrived at your desired square footage? Just following “the pack” or is it based on experience? Clarify whether you need more space for living and hosting or if you're solely focused on keeping up with the Joneses.
Reality Tip: Good design is more valuable than square footage. Cleverly-designed traffic flow, room placement, storage utilization, lighting (including windows and skylights), and interior decor (including furnishings) can make a small house feel like a spacious home. The more you learn about how good design pays off, the more effectively you can evaluate the true value of any property you view.
- To Further Career & Income Development.
If a location puts you near work, clarify how stable the employer and your job are. However, if mobility and career flexibility are essential to your chosen profession, buying a home now may not be the best plan. If career research confirms that you may have to move out of the area in a few years, you might not recoup the cost of buying and maintaining a home in that short ownership period and renting may be the best approach.
Reality Tip: If you love this location and hope to return to it when your career is established, buy now and rent out the house while your career takes you away. This property can function as collateral for buying more real estate and will provide income and equity-building potential. If you love the location, this strategy may keep you from being squeezed later out if area prices increase while you're away.
- To Find a More Affordable Location.
If all you can afford to do in your current area is rent, buying a home will probably require a move to a new area. How does that balance against commuting costs, career opportunities, amenities, and what you love about where you live now? Do the math: is it better to rent and save to invest, or buy elsewhere? Ideally, housing costs should be 30 to 35% of gross income. Have experienced real estate professionals fill you in on the benefits and realities of living in new areas you're considering. For instance, even if you don't have kids, local school quality will still have a big impact on how quickly your new location appreciates. Don't just wander around online. Spend time walking and touring the new areas. Before you invest time looking at a lot of houses, this complete reality check will let you know whether the shift to a less-expensive neighborhood or a move further out of town makes lifestyle and financial sense.
Reality Tip: To stay in the area that means a lot to you, you might consider the shift from a detached house to an attached townhome or even a condominium. Townhomes, condominiums, and lesser locations all tend to appreciate in value more slowly than detached homes and highly-desired locations, so consider the long-term costs of settling for less at the start.
- To Invest & Build Equity.
Determined to improve your finances by investing in a “fixer upper” and building “sweat equity” through do-it-myself renovations? The savings can be amazing, especially if you buy the best location you can afford and take advantage of the value your improvements and location add. If you are not trained or experienced in construction, invest time locating contractors who deal fairly and who have a lot of on-the-job experience. You don't want to pay them to learn on the job. Cheap quotes and fast talk can be expensive in the long run. As a new home owner it can be tempting to hire a contractor to update a 30-year old home's kitchen and bath to Pinterest-worthy condition while ignoring foundation problems and creeping black mold. Don't overspend on flashy renovations now and forcing yourself to refinance later to tackle expensive systemic problems.
Reality Tip: Renovating a home yourself or hiring experts is very doable, but don't confuse what you want with reality. Because you have and want to spend only $30,000 does not mean your planned changes will cost $30,000. Take the time to price out construction changes and include a healthy contingency fund for surprises. Once you agree in writing on renovation details with your contractor, avoid changes. Changes drive the budget up and don't always improve the outcome. You may benefit from investing time and perhaps a few hundred on a short consultation with an interior designer or architect. They'll fill you in on common renovation problems and usual errors before you start.
- To Move Ahead In Spite of Everything.
Have you stayed out of the real estate market because sluggish wage growth and increasing debt make your dream home seem less affordable every year? Time to reevaluate that dream. Search out a real estate professional who specializes in helping first-time buyers maximize their advantages to make a solid move into real estate. That's the professional who is interested in helping you buy well - not big. Finding someone you can trust also means you'll come back to them when it's time for you to sell and move up.
Reality Tip: In your mind, separate interior decor from building condition and design. Decor offers a superficial, and often do-it-yourself, fix. Changes and improvements to the building can be expensive, but, when done well, add space and utility. Buy real estate with “good bones” and the best location you can afford. The rest is paint and imagination which can take place gradually as you get to know the building and what really works.
- To Live More “Green.”
Research will be your friend here. Technology and materials may be labeled “green,” but they are not always as effective as advertised. They may also be much more expensive. If you want to go “green,” make sure you know what you and everybody you hire are talking about. Investigate installation requirements of green systems and don't rely on never-done-that-before contractors to get everything right. In the long run it's always cheaper to spend a little more upfront to get a job done right the first time.
Reality Tip: Environmental features can include building orientation, window placement, energy-efficient appliances, lighting, HVAC systems, landscaping for energy conservation, and long-lasting materials and technologies. A home office can be an environmental feature if it saves on commuting costs. The time spent talking to homeowners who have successfully created environmentally-sophisticated homes will be priceless. Learn from their mistakes and mis-spends, not yours.
Clarify why you want to buy a house and you'll know what you need to investigate and understand before you start the actual search. This is how to guarantee you'll make informed decisions about the best fit.