There are few other decisions in your life, like buying a house, that will fill you with absolute excitement and absolute terror. Buying a house is a big decision, and it comes with equally big parts of stress and joy. Owning your very own place is an incredibly thrilling prospect, and often times the sheer thrill of knowing you’re going to buy a house and own a home can blur everything else. It’s easy to lose perspective and dive in headfirst without taking a second to breathe first.
Buying a house will also be an emotional ride, and for good reason. But all of those emotions can really start to play with your head, and when you’re spending that much money on such a big purchase, you really need to take a second to think and clear your head. Your own mind can be the biggest trap you’ll ever encounter when buying a house. But, if you know what to watch out for, and how to resolve those traps, you’ll know for certain that you’re making the best decision for you.
Outsmarting Your Own Mind
When it comes to real estate and buying a house, there are several ways that you’ve been trained to think. However, these are not set in stone, and they could actually force you into buying a house when you shouldn’t. Here we outline these myths, and here’s what they are, along with how to avoid getting trapped by your own mind when buying a house. First of all, take your time and work with a trusted real estate agent.
Buying or Renting
You’ve heard this one before. It’s better to buy a house because when you rent you’re just throwing your money away. It can often feel like that. After all, when you rent, you don’t have anything to show for all of that money you are sending to the landlord every month. When you move, you don’t get any money back (except for maybe your deposit), and you never earn equity in a rental.
But you shouldn’t think that way. Determining whether it’s better for you to rent or buy is based upon housing prices, rental prices, how long you’ll be living there, mortgage rates, property taxes, and more. If you’re not going to live an area for very long, or mortgage rates are high, it might make more financial sense to keep renting. Remember, buying a house is a big purchase, and it takes a lot of money. Just because you can buy a house, doesn’t mean it’s more affordable. You need to think in terms of what you can afford, monthly payments, and how long you’ll be living there.
Knowing Your Needs
What you need today might not be what you need tomorrow, or vice versa. Depending on the size of your household, and your plans for the future, you might not want to buy a small one or two-bedroom house. While it is extremely important to keep your current needs in mind, you also need to plan for the future.
On the other hand, if you have a family now, will you be living in the house long enough for your kids to start leaving? You might not want to buy that huge house if you’ll end up with less people living in your home. You want to buy a home that you can grow into or shrink into. Owning a home is a long term investment and decision. As such, you need to think about and plan for the future when you buy a home.
Rising Home Prices
The real estate market fluctuates. That’s the nature of the market. As such, home prices will rise and fall, and sometimes, when the price of houses is rising, you might panic. You don’t want to get into a situation where home prices are so high that you suddenly can’t afford the house you wanted to get buy.
Buying a home isn’t like playing the stock market
You aren’t looking to buy low and sell high. Instead, you are looking to buy a house based upon your budget and your needs. Don’t think about rising home prices as meaning that you’ll never get your house unless you buy now. Markets fluctuate and operate on cycles. If now isn’t a good time to buy because prices are high, wait. Save up some more money, and use the time to get better prepared.
Renovations as Profit
If you’re getting ready to sell your current home, you might be working on some renovations to make the house more attractive. But don’t fall into this mind trap. Not all renovations are worthwhile investments, and you can end up losing money instead of making money. Be smart about your renovations, and only do the ones that have a high return of investment. Springing for a more ornate granite countertop might not have the same return as simply upgrading to a common granite.