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!