I fell in love on the drive by. The front door was open and I could see all the way through the house to the gorgeous trees in the backyard.
It had no houses behind it, backed only by a beautiful city park with several acres of green space. As a nature lover, and an introvert who likes her space, this was the “perfect” house.
And I hadn’t even walked through the front door.
We had been waiting for an offer on our town home and it just so happened that we got an offer the week this “perfect” house went on the market.
Though it was priced at the top of our bank pre-approval amount, it was below the county’s assessed value and a bargain compared to other properties in the same neighborhood.
We understood the bargain price after our first showing. The living room carpet had a big bleach stain, the basement smelled like cat pee, and the siding, plus a few of the windows, were rotting.
Our real estate agent’s handyman performed a sort of free “inspection” to inform us of major things that needed done immediately and how much they would cost.
Although this gave us some pause, we loved, loved, loved the location and knew this was “the one”.
Our plan was to scrape up enough money to do the minimum work necessary and then chip away at other repairs as time and money allowed.
During the first few years in the house, we had a negative net worth, thousands in student and consumer loans, and were continually putting all extra cash toward necessary repairs.
In hindsight, it wasn’t the best money decision we ever made but, even though it cost a ton of sweat and cash, valuable lessons, DIY skills, and priceless memories were built in that house.
The hidden emotional side of home buying
In the search for a new home, we picture our life in each home, take in the smells and sounds and possibilities it holds.
Initially, we rely strictly on feelings about the home, with little regard to the other, very important, aspects of a home buying decision.
Allowing feelings of excitement to guide us is a dangerous practice, considering we are likely making the largest purchase of our lives.
The tremendous emotional impact of the home buying process can cloud judgement and, if we aren’t careful, cause us to overlook the most important factors to making an informed decision.
Before signing a contract, consider the following guidelines to help you make a more informed, and less emotional, choice.
Home Buying Guidelines
You decide how much you can afford
Taking out a mortgage for the amount the bank says you can afford is, typically, a poor financial move. Though banks look at debt you have, they do not consider other monthly expenses and financial goals.
Calculate your debt, monthly expenses and life goals (retirement, anyone?) when deciding how much to spend on a house. The general rule of thumb is that a mortgage payment should cost no more than 28% of monthly take-home income.
It’s best to be conservative, taking into account all of your expenses and financial goals before calculating the 28%, and then aim even lower.*
Keep in mind you will be paying for this home for a very long time and the higher the cost, the longer it will take.
Ask yourself if it would be better to buy a less expensive home, allowing you to pay it off sooner than the standard 30 years. (It doesn’t hurt to ask how many vacations you will have to forego to afford the house either.)
Do your homework
Study the value of homes in your area. Know the typical price per square foot and learn about historic housing prices, as well as current market conditions. Websites like Trulia and Zillow are great when you are researching property values.
When you are well informed on home values in your market, you will know when you find a house that’s a good value in your price range.
It’s exciting to go look at homes, but it’s not wise to jump on the first property you see. Take your time and look at a number of options. If you still like the first property, you can go back and take a second, closer look later.
Know what your needs are
Do you really need 2500 square feet? Is the hot tub a necessity? How much more time and money will that extra ½ acre cost you?
Houses require maintenance and repairs and take a slew of time and money. Do you have the time and cash necessary to take care of a large house with a large yard, or would you be better off with something smaller and easier to maintain?
Think about your everyday life now and consider if the extra space or amenities in homes you looking at are worth the extra cost in time and money to maintain.
Get an inspection
Don’t underestimate the importance of having an inspection. Problems that aren’t visible to the naked eye can surface during inspection, revealing the need for thousands of dollars in future repairs. Take the results of inspections seriously and don’t overlook potentially hazardous results.
Consider resale
When my family was searching for our latest home, rural areas were most appealing to us, but resale on those homes is poor due to their remote location. We settled on something with less space (and trees), but with a shorter commute and better resale potential.
You may think you’ve found your dream home and plan to live and die there, but life changes in ways you cannot predict. Resale is an important consideration – you never know when a job change or other life circumstance will pop up and necessitate the need to sell your home.
Remember the “perfect house” can create the temptation to ignore important issues. Don’t let your emotions lead you in the wrong direction. By following these guidelines, you can make a smart, informed decision.
I bought my first house because I loved the back porch view. Not the best reason.
We bought our current house because it had a big yard and no stairs. …and was $25K below tax value in a great school district and 10 minutes from my inlaws house. Much better reasons, particularly with a new kid. We’re still working on making it our forever home, but there’s no reason it won’t be.
I understand the draw of a good back porch view, Emily! Your current house sounds like a great buy. School district is certainly an important consideration – this is the main reason we made our most recent move and we don’t regret it at all.
I agree that it helps to recognize that home-buying is emotional. Great points to think through. We took three years to decide when/which home to purchase, and pondered a lot of similar topics throughout. It’s led us to enjoy our home while having reasonable expectations about the financial angle of buying and selling.
Thanks, Kalie! Taking your time to buy your home is a decision I’m sure you’ll never regret – sometimes I wish we would have taken more time.
I know when I bought my house I had to be reminded how important resale is and one major thing that helps with resale is proximity you schools and how good the school system is. We ended up buying a house in the best school district as a result.
Thanks for stopping by! It’s true the school system has a huge impact on resale (something I should have mentioned in the post). We moved so our kids could attend high school in a great school system, but I’m sure it’ll help with resale as well.
Homes are appliances that can make your life better, yet people treat them like they are living, breathing things. I’m glad my generation is switching away from being a nation of homeowners to a nation of renters. I think the benefits of getting up and moving whenever you want are much better than the stability that comes with owning a home.
I agree it’s important not to look at a home as an investment. I wish we had rented for at least a decade longer than we did, rather than buying and selling 3 times. But at this point in our lives, we are happy with owning – we are settled in one area, love to DIY and garden, and spend a ton of time at home. I think it really is an individual decision but, either way, it should always be an informed decision.
We have only purchased two homes – a townhouse, and the house we’re in now. Both were entirely emotional purchases, and both, we realized in hindsight, we should not have bought. We jumped in too soon and maxed out. Your advice is excellent. I hope that people who plan to buy a home in the next while listen to you!
Thanks for sharing, Ruth! It’s hard not to be drawn in by our feelings about a house and, unfortunately, many of us have suffered the consequences of doing so. I wish someone would have given me my own advice 15 years ago (and hopefully I would have listened!).
Instead you can give it to me and I’ll listen!
*Looks fondly at the cute SFH with big private backyard as I drive by*
It’s funny, when you told me about the SFH, I was sooo excited about it too! I get abnormally excited about real estate, particularly SFH. I have to constantly remind myself to take a step back and give it some time. I fell into the trap of letting my emotions guide me more than once! Thanks for listening, Gwen! 🙂
Purchasing a home for the first time can have such an emotional attachment. I do not have this experience yet but many people only consider the price of the mortgage and focus on the tax deduction aspect of the mortgage interest. Yes this government does this to promote home ownership but there are so many other costs such as HOA (potentially), insurance, maintenance etc. that need to be factored into the budget. This is one of the reasons I favor renting until all debt obligations are paid off as this is an investment that often has many hidden cost.
Great point on the hidden costs, Stefan! This is a huge consideration when buying a house – not only does it require maintenance and repairs, but insurance is higher. Plus, many first time home buyers have PMI when they don’t have a 20% down payment. You’re making a smart move by dealing with your other debt before considering a home purchase.
This is awesome, awesome advice! There is one thing that I think we would have done differently and that would be to not be in such a rush. When we purchased our home 6 years ago, we had just had our baby girl and we were cramped with all her stuff in a 1-bedroom apartment. The $8,000 first time homebuyer’s credit was set to expire 2 months before we found our home. We rushed because of these two factors. While we have grown fond of our home and still live pretty comfortably, we didn’t take into consideration that 5 years in we would have another kid and start feeling cramped. So now we’re here and don’t know what our next move will be, but we will certainly be taking our time this go round.
Thanks for sharing, Latoya! I completely understand wanting to take advantage of that homebuyer’s credit. At least you have the luxury of taking your time this round. Being rushed into making a home purchase has caused us to overlook some really important factors in the past.
These are all great things to think about. I know far too many people who skipped the home inspection or didn’t get a thorough enough home inspection. It’s definitely something you want to spend money on!
Thanks for stopping by, Michelle! Yes, it’s so worth it to spend a little extra on the inspection – a couple hundred dollars could save thousands in repairs/maintenance down the road!
It’s so hard isn’t it. We loved our house but we were lucky because the previous owners hadn’t done it up for viewings so it put a lot of people off but we were able to see past it.
I definitely agree that it can be an emotional decision, it’s important to feel happy in your home but not go over your limit.
So true, Francesca! Finding that happy medium where you are satisfied with a house but still stay within your budget is so important. Thanks for stopping by!
When we were in negotiations for our house, the inspection turned up some pretty serious concerns for us. First, there was radon in the basement (which we were planning on renting out) and the roof was estimated to possible not last another year. Since the house was on the higher end of what I was comfortable with paying, I wasn’t too excited about then shelling out thousands of dollars for a new roof. We countered offered asking the owners to install a radon mitigation system and to go halfsies with us on the roof. The agreed to the mitigation system (because they’d have to disclose it now that they know) but refused the roof. We went back and said roof was non-negotiable. While waiting for their response we resigned ourselves that we wouldn’t be getting the house and even starting looking around again. The owners finally agreed a half hour before the deadline. It was really stressful and frustrating but we knew that we couldn’t let emotions overtake judgement what should be considered a business decision.
Great story, Jax! Thanks for sharing. This is the perfect example of what to do in the house buying process. I’ve been in the same types of situations, where we were waiting and waiting for an answer and can be incredibly stressful. But in the end, you are so much better off ignore the emotions and do what your brain knows needs to be done for the purchase to work for you.
This is a really good post! I think you are totally right – there is definitely an emotion factor when it comes to buying a house. My husband and I were house hunting awhile back and thought we found the “perfect” house. It had a great backyard with fruit trees, awesome gardening space, and had the out-in-the-country feel. I fell in love with it which made me turn a blind eye to all the things that weren’t so perfect about the house…Like how it didn’t have the space we needed, was in an area where it would just depreciate over time, and was slightly overpriced for what we were getting. Luckily, my husband was able to talk some sense into me and we decided not to put in an offer. One of the best decisions we ever made! Anyways- that was a long winded comment but once again, nice post!
🙂
–Rachel @ tidyandteal.com
Thank you Rachel! Any house with fruit trees and garden space would draw me in too. It happens to the best of us! At least you didn’t jump right into it and regret it later. Thanks for sharing your experience!
Love the post and agree with your points! Homebuying is soo emotional! But I am/almost have always been a penny pincher. I wanted something small, close to work with no homeowners association and enough land for a veggie garden. I qualified for a $170K mortgage instead I purchased for cash a fixer upper.. I paid and got a really good inspection so I knew what I needed to have done. It isn’t in the prime part of town but I have had no issues… I wanted it close to work which I got (7 miles away). There is no homeowners association so I can do what I want which includes a front yard veggie garden and I got 1/3 of an acre. I am very very pleased. If I had to do it all over I would have not done a thing except purchased in an area with public transportation. Then I could have gotten rid of the car as well 🙂
Hi Faye! You have a great example of how to keep emotions from getting in the way of an informed decision. It sounds to me like you did your homework, paid close attention to exactly what you wanted/needed and were willing to do a little work to save money. 1/3 acre is a great size to grow lots of veggies too! Thanks for sharing your experience!
I bought my first house because I liked it and the location. In hindsight I would have been better off renting. The house was older (and I live in Florida), and needed a new roof, brand new central a/c, and numerous other repairs. Also, don’t go with the inspection company your realtor recommends. Lesson learned!
I here ya, Lisa! I loved the location of the house I talk about in this post. And, really, we knew what we were getting into as far as repairs go, buy let our hearts take the lead and did it anyway. I truly believe we would have been much better off to rent for waaay longer than we did.