There’s no way around it: buying a home is emotional—especially if it’s your first. But there are some smart things you can do to feel less stress and more enjoyment.
Know Your Numbers Going In
Whether you are a first-time homebuyer or have been through the process before, buying a new home can be stressful! To make the process easier, it is a good idea to do some legwork first. We suggest doing some research to familiarize yourself with the process, current mortgage rates, and home buying terms (ARM? Escrow? Mortgage points?). You will also want to ensure you know how much home you can afford. While the cost of your mortgage will likely be your largest consideration, keep in mind that being a homeowner also comes with other expenses like insurance, taxes, and maintenance. For instance, does your dream house have a pool? Recognize how that will impact your insurance and your utility bills.
Once you are comfortable with your budget, it is time get to pre-qualified. We suggest interviewing at least three lenders and using your research on mortgage rates, etc. to help negotiate terms. Keep in mind that while a lender might tell you that you qualify for a higher mortgage than your own calculations suggest, a higher mortgage may make your monthly budget tighter than you were hoping. Sticking to your budget and making sure to buy a home within your means will help keep things less stressful and give you some “wiggle room” if an unexpected expense comes up.
Establish Your “Must-Haves”
Now that you know your homebuying budget, the fun of shopping for your dream home really gets underway. Before you dive in, consider what your “must haves” and your dealbreakers are. What do you love about where you live now? What do you hate? Also consider what you hope your life will look like in the next few years. Whether you are approaching this as your forever home or a stepping stone, your new home should fit the picture of where you are now and what you foresee for yourself for (at least) the next few years.
Be sure to consider not just the physical aspects of a prospective house (Lots of natural light? A yard for your puppy?) but also your lifestyle, the location, and the investment value. What is your current working situation? Do you or your significant other need a home office? How far are you willing to commute (and is there traffic that might impact the commute time)? If you have school aged children, are you looking for a home near their current school or will this purchase mean a change in school district? What about other amenities? Is there a grocery store close by? If you are weighing options, keep in mind the frequency of usage versus daily impact – for instance, is it worth getting a bigger house with a (rarely used) guest room if it makes your commute 20 minutes longer? Finally, be sure to consider the resale value of your future home. While you should love your new home, you should also consider if others will love it to.
Try to Avoid “Falling in Love” with a House
A home is likely to be not only the largest purchase you ever make but also the largest investment. The dichotomy between searching for your dream house while simultaneously trying not to become too attached is hard to navigate. For first time homebuyers especially, this can be extremely stressful and add pressure to an already emotional time. During this time, it is important to rely on your real estate agent’s professional opinions and let logic lead. It’s also important to ensure that you trust your agent and have clear lines of communication with them. Remember that there is always another “fish in the sea” and that your actual dream home will not only suit your lifestyle now, but also help you invest in your future.
We know that “Home” is an emotional word, and buying a home is an emotion-laden process. But when you do your homework, know what you can afford, and know what is most important to you, it reduces uncertainty and lets you focus more on enjoying the process. Our certified, professional financial planning team can help you build a home purchase into your long-term financial plan. Contact us for more information
