You Have Buyer's Paralysis?
Many issues can be at root of indecision
By Blanche Evans
You've looked at dozens of homes. Your REALTORŪ is
about to tear her hair out with frustration. You are paralyzed, letting
one great home after another pass you by. Why can't you make a decision?
Buying a home can be an overwhelming process. There
are so many decisions to make and any of them can mean serious financial
consequences. A home, after all, is hardly a liquid asset. Nor is it a
growth investment, according to Wall Street definitions. It's your
greatest financial debt, even while it puts a roof over your head. As it
appreciates, it also needs repairs and maintenance. With all that
weighing on you, no wonder you've got commitmentphobia.
Yet, you really want to buy a home. You know that
few purchases will provide you the quality of life that a home of your
own does. There are plenty of advantages, as well - tax breaks, rising
real estate values, a stable environment for the family, to name only a
few. So you stifle your worries and keep looking for homes. You just
can't find the one that's just right for you.
It might be time to back this train up and examine
what is causing the conflict between wanting to buy and being unable to
make a decision. There is a cause, and it's name is money. The question
is, which aspect of money is stopping you from moving forward?
Fear of spending too much
Lenders will loan you
money at the top of your ability to borrow. Realtors will suggest that
you will be happier in a "bigger, better" home, eliminating the need to
"trade up" in a few years. Stretching to buy the most home you can
possibly afford is a good strategy, but only under certain conditions -
that you have confidence that your salary will rise, that your income is
stable, and that you can handle large surprise expenses.
If you've been pre-qualified, you are already
looking at bigger, better, more beautiful homes at the top of your
range. But something isn't quite right. Even though you may feel that
your income is stable, a feeling is telling you that if you buy in this
range, you won't have enough in reserves should something happen. Those
are your instincts talking, and you should listen, because your desires
have been doing the talking up to now. Your instincts are telling your
desires to scale back a little.
That means backtracking. Talk to your Realtor and
ask her to show you less expensive homes. You can't go wrong buying
slightly under your ability. In fact, many financial advisors tell their
clients to budget about 25% of their income for housing in order to
position them to build reserves for savings, investments, home
improvements, emergencies and dozens of other reasons. That's almost six
percent less than lenders will allow you to borrow. Just think what else
you can do with six percent of your income. You'll still have your
house, you'll just have more to do other things with.
A conflict in goals
Many couples purchase homes
with the idea that they will have a child, so stretching buying power to
have the extra space makes sense. But if you are trying to accomplish
two big financial goals at the same time - buying a home and adding to
your family, then something has to give.
Contact us today!