Buying a home
Buying a new home: Has the thinking about homes being the great American Dream changed???
Has the recent bursting of the housing bubble, that has caused a drop in the collective net worth in America by trillions of dollars-changed our thinking about buying a home? Even those living in paid for homes, know that the value has dropped, and are affected by it..
This all-to-real feeling, causes all-to-real changes in our financial behavior, and our emotions. We spend less, and worry more- about the future.
The famous personal finance blogger, Seth Godin, has written an interesting article about the emotional aspects of purchasing a home, and a few of the changes as he sees them….
He makes several valuable points, especially pointing out what your home represents-it is not just an investment, it is a living breathing thing, in our minds…..
So let’s look at the OLD versus the NEW!!!!
Old-school home buying rules:
- Buy as much home as you can afford, with as little money down as the bank would let you.
- Buy the biggest home in the neighborhood-so others will know, you are the big cheese.
- Don’t worry about having to sell, sooner than planned-there are always buyers!!!
- You will always make money, because home prices always go up!!!
- Utility prices don’t matter.
New (post crash) home buying rules:
- Buy the least amount of home that fits your needs.
- Pay at least 20% down
- Make sure you buy a home in the middle of the price range of your new neighborhood.
- Make sure you understand that the Realtor represents the seller-if you need hand holding hire your own Realtor to help.
- Many “green” options now make sense with higher power, and oil prices.
- Don’t worry about hurting feelings with a low ball offer-because you need to be able to walk away if you don’t get the deal that fits you.
- The investment value of real estate is decided the day you close, in most cases-you will either make money or lose it when you sell based on your purchase price-not a hoped for/prayed for increase in value…..
- Don’t buy the home if you aren’t planning to be there for 5 years or more.
Now many of these rules, are really not new-but they have a new sense of importance.
Let me know your thoughts about home buying-will you be doing things differently now? Love to hear your thoughts or questions.
So thanks, Seth, for your thoughts on home buying-you are welcome to join us in the personal finance blog world, any time!
See my review of Seth’s latest book, Linchpin, here!
Tags: buying a house, home buying, how to buy a house, new rules for buying a house, Seth Godin's view of home buying
I’ve always played by the “new” rules — only buy what you can afford, plan to own the home for a number of years, and put down as much as you can. You have to figure out how much house your budget can handle when you factor in other costs such as utility/maintenance bills, property taxes, and the like.
However, I look at a home as just that — a HOME — more than I view it as an investment. Unless something drastic happens personally or financially, my husband and I plan to stay in our home for the rest of our lives.
Good points re deciding what you can afford. Dream homes can turn into nightmares if you can’t afford them.
Thanks for stopping by.
[...] about their spending. Then, when it comes time to spend money on something they really want, like buying a home or a family vacation, they don’t have the money to do it because they’ve squandered so much in [...]
Home is one of the basic needs of human being. I don’t own a house yet but I am saving to buy one in the future.