Is it time for you to take that giant leap into homeownership? Before you spend hours online cyber-stalking your dream home, take a few minutes to think about what's really important to you.
- What do you want the house to do for you? Is this a way to build some equity and stop paying rent? Do you need more space for your growing family or growing business? Are you wanting to simplify and right-size? Knowing how long you expect to live in the home can help you be more strategic about your purchase. For example: if you expect to buy a bigger, better house within a few years, buying in a place where it's easy to rent can give you more options when you're ready to move up; a growing family will need lots of storage, a yard and great school districts, etc.
- How big? The easiest way to figure out how big of a place you need is to look at where you're living now. If you're living with your parents in your childhood bedroom, you might think you can add a kitchen and living room to that footprint and be happy but don't forget the stuff you have in the basement, attic, garage, etc. Also remember that your life may look different when you're on your own. My friend, Susan, needs a whole close just for holiday decorations! Do you ski? Kayak? Cycle? Play hockey? Collect Star Wars figures? All of these things take space so remember that when you're house hunting.
- Where? It's normal for people to look for a home near where they live now or where their friends live. That can be great but make sure you're not limiting yourself. If you can, take tour of your local area. Spend an entire weekend in each of the towns within a 20-minute drive of where you now live. Try out the restaurants, walk and drive the streets, window shop, strike up a conversation with someone working in their yard. Try to get the vibe of the place, it may be different that what you *thought* you knew about the area. One Boston suburb used to be all about young, single people who were active and outdoorsy. You may have that idea of the place and go buy a condo there only to discover that now all those single neighbors that you thought you'd be meeting and joining on biking tours of France, have paired up and are having kids. As a single person, though you may love your neighbors and their adorable kids, it won't give you the lifestyle that you were envisioning. Do you know that you want to live in the city? That's a great choice for some people - no commuting, tons of places to eat, go and experience - just realize that you'll be sacrificing space - inside and out - compared to what you can get for the same money in the 'burbs - and remember also that people moved to the 'burbs to get more space so you'll find more families. I love my house and its location but have nothing in common with my neighbors and so I'm missing out on the kind of warm, neighborhood feeling that I'd have if I lived elsewhere.
- How much? You should have some idea as to how large of a monthly payment is comfortable for you - maybe it's the rent you're paying now plus whatever percentage you've been saving for the downpayment, maybe you have a monthly budget that you don't want to exceed. When you talk to your loan officer (see next week's blog for more info on that), he or she will tell you how much the bank will lend to you. That might not end up being a comfortable monthly payment so it helps to think that through before you get romanced into a too-high mortgage.
- Amenities - Do you *need* a garage? Is a dishwasher or second bath on your list of must-haves? Make a list of things that you're not willing to sacrifice and make sure that all of those things go into the initial search. If you're not finding enough in your price range, you can always back them out and manually look for homes that will let you add them. Do that strategically - adding a dishwasher is easier than adding a second bath, which is easier than adding a garage - so remove the dishwasher requirement first, etc.
- Use your crystal ball - Even if you're buying with the idea of selling in five years, something may change, making that impossible or unattractive. It's great if you can buy a place that has future options. For example, if you know you'll need more space in 5 years, buy a house that would allow an expansion into the attic or an addition. You can buy a single-family home in an area zoned for 2-family. If you can't sell when you're ready to move, you could convert to a 2-family and rent the units or sell them as condos. The more options you leave yourself, the better off you are.
Use a spreadsheet or even graph paper to track your goals and remember to check in with them each time you think you've found The House. This may seem obvious but believe me, buying a house is such an emotional experience that you can lose all reason. I sometimes have to point out to clients that there was virtually no closet space in a home or that the house needed a lot of maintenance. It helps to have a real estate agent or even a family member by your side to help keep you on track. Let me know how I can help and tune in next week for the HBU E03: Getting Pre-approved.
Did you miss Part 1?
Here's some more great info from Investopedia! More on goal setting from Brian Tracy. More on what to look for from zillow.com.
I've Signed the P&S, Now What?
