5 things you should and shouldn't do when buying a home

Listen...you can talk to a hundred different people. Real estate agents. Home owners that have gone through it themselves. You can Google search for a hundred different articles and blogs on the subject. The result will be a hundred different opinions.

What's the best way to buy a home?

This is the question that really can't be answered definitively. There are so many factors and variables. Here is my simple advice. "Golden rules" for the home buying process.

#1 DO buy for today

Buying a home can be scary. I assume most people do not purchase a home for the thrill. Instead, most people are seeking stability. According to the Zillow Group Consumer Housing Trends Report 2017, the majority of Americans who sold their homes last year lived in those homes for at least a decade before selling. Some are even staying for the long haul.

Almost half (46%) of all homeowners are living in the first home we ever purchased.

Buy a home you want to live in for at least five years — one equipped (or ready to be equipped) with the features and space you need, both now and in the future. Don't think of a home as something you will "grow into". This is the kind of mistake that can stretch you thin.

#2 DO decide on your down payment and stick to it

If you can afford it, a 20% down payment is ideal.

Buyers who put less than 20% down pay a premium. Most lenders force you to take on private mortgage insurance (PMI) in the absence of meeting the 20% threshold. Less financially detrimental than it used to be given today’s low(er) mortgage rates, it still adds to the monthly payments that are already inflated due to higher mortgage amounts.

Buyers who put more down upfront typically make fewer offers and buy faster than those who put less down. A higher down payment reduces your financial risk. You don’t want to owe more money than your house is worth if local markets dip when you need to sell.

#1 MAYBE think of your home as an investment

Yes, your home is a financial investment and likely your biggest asset. But it carries liability with it. It’s also where you sleep, eat, entertain, start a family, and raise your children. The housing market is unpredictable regardless of the sub-market you live in.

Expecting your home to net a big short-term financial return is like expecting a specific day a year from now to be rainy.

You will most likely be living in this home for several years, regardless of how it appreciates, so do yourself a favor. Find a home that will meet your needs and enable you to build the life you want.

#3 DO NOT get distracted

The housing market is short on inventory, so focus on finding a home you can afford that meets your needs. Today. Don’t get distracted by shiny objects. They might break your budget. Nice-to-have features can inflate the price tag for things you don’t particularly value once the initial enjoyment wears off. You know when the new car smell in your brand new car wears off and you are suddenly picturing yourself in the next one?

Make a list of your basic needs. What are your must-haves? What is your desired neighborhood. Stick to finding a home that meets these basic needs and think of the rest as a bonus.

#4 DO NOT deviate from your budget

It’s important to set a budget early — ideally before you even start looking at homes. In today’s market, especially in the more competitive markets, it’s incredibly easy to go over budget when price wars can test your will.

The most common budget buster? Location.

I get it. School districts matter. Commute time can greatly determine your quality of life. But know what you’re willing to compromise on. Maybe it's a less square footage. Maybe it's age of the home. Maybe it's a type of roofing. That's for you to decide.

#5 DO be willing to walk away

Moving into your new home is exhilarating. Finding and purchasing said home...well, it sucks. It's usually time-consuming. It's stressful. There are ups and downs and your mood can literally ride on this roller coaster. Don't settle on a home that is kinda, sorta what you want or within your budget, for the most part. Don't lie to yourself. When your patience breaks, you can make a bad decision.

So manage your expectations going in. Always be prepared to walk away if the sellers don’t accept your offer. If the home doesn’t pass a rigorous inspection, hold to what you said you would accept going in and do not deviate.

This isn't a sprint. It's a long game. You want to be happy 5 or 10 years from now.

#homebuying #financingyourhome #buyfortoday #musthaves #nicetohaves