Keith and Sue are shopping for their first home. Keith would really like a home office.
They find a home that lacks an office but has the guest bedroom that Sue has been longing for. Everything else about the home is ideal, including another of Sue’s hot buttons – the kitchen of her dreams. Sue is considering giving up the guest room to make way for Keith’s home office.
Ah, the art of compromise – meeting in the middle. Unless you are single, and money is no object, making concessions is a necessary component of the home-buying process. Without a plan and a clear picture of exactly what you want in a home, however, you may end up compromising on items that should not be conceded.
The first step in getting as close to your dream home as possible is to get clear about which items you are willing to compromise on and which items you must have. Once that’s done, follow these tips to avoid veering from the plan.
Avoid Thinking With Your Heart
Sure, the kitchen is to die for, but even a top-of-the-line Wolf range won’t comfort you when the neighbor’s teenagers blast their music at full volume for their weekly parties.
It’s easy to fall in love with certain aspects of a house, from picture-perfect landscaping to wall colors. You do yourself no favors, however, if what you love about the house distracts you from features that you promised yourself you would avoid. Especially if those features cannot be easily changed.
When you find yourself continually being dragged back to the yummy spa bathroom in the house on Elm Street, bring out your wish list to remind yourself that your number one item on the list is peace and quiet. If the house on Elm Street also fits that bill, you may have found your dream home. If it doesn’t, you may be thinking with your heart and making compromises you promised yourself you wouldn’t make.
Avoid Compromising Your Spending Limit
While your lender may preapprove you for a $500,000 mortgage, you must consider what the monthly mortgage payment means to your budget and, thus, your lifestyle.
Obtaining a loan preapproval is one of the first steps to take when purchasing a home, but the step that comes before or immediately after that is even more important: making a budget. This is especially important for first-time buyers who are unaccustomed to how much money it costs to own and maintain a home. Add to that life’s ability to throw curveballs, such as job losses or illnesses, and you understand how important it is to not stretch your housing budget too thin.
“Remember that the lender is there to make you a loan, and the more money you borrow, the better it is for them,” Ellen Derrick, a certified financial planner, tells Forbes. Derrick goes on to recommend shopping for a home priced 20 percent below the preapproval limit. For example, if you’ve been preapproved for a $200,000 loan, shop for homes with a maximum list price of $160,000.
Tip: Don’t even look at houses above the price you’ve determined is manageable for you. More expensive homes will naturally have more desirable features – you’ll only set yourself up for disappointment and you may be tempted to overspend.
The One Thing You Can’t Fix
Never compromise on location. A house without a view will never have a view, and a house on a busy thoroughfare will never be on a quiet street.
So, while it’s acceptable to compromise on wood floors, paint and landscaping – all things that can be changed – never compromise on location. If the area doesn’t suit your lifestyle and family situation now, it never will.
The best way to avoid making unwise concessions is with a wish list. Determine what each member of the family wants in a new home, then organize the items into categories: “must have,” “would be nice to have” and “willing to compromise.”