So You Want To Buy A House: Part 1
So you want to buy a house. That’s exciting!
Maybe it’s just me, but whenever ‘buying a house’ comes to mind - this is what I picture. What do you picture?
Now, before we get too carried away 😊 let’s examine this a bit more. What questions should you be asking yourself to make sure you really want it and are really ready? If you have a partner, are there more questions you should be thinking about too? (Spoiler: the answer is yes.) And even if the answer is yes, yes, and yes, you still want to make sure you know what expenses you’re signing up for and walk through a few ‘gotchas’ before pulling the trigger (we’ll cover these in Part 2). So let’s get to it.
Maybe you recently saw ‘For Sale’ on a beautiful house in your neighborhood. Maybe you feel you’ve been ‘throwing away money on rent’ for a long time and that it’s ‘just time’ to buy. Maybe perusing websites like Zillow or Trulia has become a bit too much of a habit. For whatever reason, buying a house is now on your radar and you’re excited about it. That’s great, but let’s take a closer look at some of these reasons.
The number one piece of advice here is: to buy when it’s right for YOU. Not because interest rates are low, not because the market is where you want, not because it’s an “investment”, but because you’re legitimately interested and excited to buy a house and your personal finances allow you to consider that option (more on the expenses in Part 2)..
The number one piece of advice here is: to buy when it’s right for YOU.
Below are some questions to ask yourself (ideally before you even start looking). Be very honest with yourself here - buying a house is a tricky thing. It’s not something that we as humans do many times in our lifetime: so it’s the exact kind of thing you want to get right the first time and the exact kind of thing that’s hard to get right the first time (because there’s no feedback loop to learn from).
Questions to ask yourself first:
Why are you thinking about buying a house?
What associations do you have with buying a house? (ie financial vs emotional vs others)
What kind of house are you looking to purchase? Can you see yourself living in?
How long do you plan to live there?
Where do you see yourself living?
How much of your money do you envision spending on a house? Both up front and on an ongoing basis
When would you like to buy one/how much are you willing to save for this vs other goals?
How much do you value the flexibility of renting?
If you regarded all the money you put towards the house (down payment, mortgage, maintenance, insurance, etc) as "spent" and never getting back, would you still want it?
These questions are all intended to help you fully understand any associations you may have with purchasing a house and what you’re looking to get from the house. Very often there are pre-associations that you may have about buying a home - your goal is to become aware of what these are. If you’re legitimately really excited about the general concept of owning your own home (and many people are!), that is one good reason to consider buying.
However, it should not be primarily because buying a house is an ‘investment’, because it’s not. In fact, the math for renting vs buying can often work out in favor of ‘renting’, depending on a lot of the factors in your area. (I know this can be controversial; more in Part 2.) Buying also may not make sense if you plan on moving to another area in a few years - it takes more time than you might think for the ‘transaction costs’, or closing costs, of the purchase to even out for you to even ‘break even’. Asking yourself these questions forces you to be honest with yourself and think through what you’re really wanting in life before jumping into a huge decision headfirst.
Now some additional questions for couples:
How are you going to arrange the payment responsibilities for upfront costs, ongoing costs, etc?
How ‘joint’ or ‘separate’ do you see this purchase?
Will one or both partners be on the title?
Will one partner ‘pay rent’ to the other? How do you both feel about that?
What would you each expect to happen if you split up?
If you’re not currently married, would getting married change how either of you feel at all?
These questions are important to think through because they will shape the relationship dynamic from the time of house purchase for the foreseeable future. For example, if you’re not married and one partner ‘pays rent’ to the other, you definitely want to think through how you would both feel say ten years after purchasing the house: one partner will theoretically have built up equity in the house and the other will have not.
More on the numbers of buying a house coming up next - regarding what particular expenses you should consider and what ‘gotchas’ to avoid - in part 2!
Need guidance on how you should be answering or working through these questions? Reach out to Sarah for a free, no-obligation chat here to see if it’s a fit!
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