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!
