4 Mental Traps to Avoid When Buying Your Next Home

Do you think you are ready to buy a house, but worry about all the details you could miss? Maybe you are a bit too excited. Before you sign over your John Hancock, stop for a minute and self-diagnose yourself if you are falling in one of thsese common homeowner traps.

1.       Assuming that buying is always better than rentingMost people believe that renting a home is like throwing money away. This is just an opinion, nothing more. The decision to buy against renting needs to be based on several factors. Factors like your tax bracket, the amount of time you will be spending in the residence, the average prices in your area, and the mortgage rate for which you qualify. There are more but those are just a few. As an example, let’s say you play to live somewhere for three years and the home will cost $100,000. Essentially this is costing you $,1000 a month. In this case you may just want to buy something. On the other hand, if you want a house that’s $650,000 and you could rent for $,1000, this might be the better choice.

2.       Believing your current needs reflect your future needsLet’s imagine you are in a relationship with a significant other. You both enjoy traveling and don’t want to spend a ton on keeping your home maintained. You will probably land on a small home that fits both of your needs, and ignoring the ones that are not in a decent school district. When you are buying a home, think about the future, not the present. You had better buy the home you will want to be living in in five to ten years down the road. You might make a family in the meantime and that extra space will be crucial! Do not neglect other factors like HOA fees, proximity to jobs, school districts, yard size, and neighborhood safety. Your wife asks you to build a swimming pool, but in three years, your youngest child goes off to college and you want to travel like you all used to. Who has time to upkeep a pool when you’re backpacking in Argentina.

3.       Fear of getting “priced out of the market”There’s no denying home prices have risen sharply in the last five years. You want to believe the prices will keep rising, and if you don’t buy something today, you’ll price yourself out of the market. You might also believe if you do buy now, you’ll flip your home and sell it for a profit. What you need to remember is housing prices are local. The value really matters on what is happening around you. Keep your ear to the ground and do your homework, and find a home that is priced just rightly for you.

4.       Believing all renovations are profitableIf you are planning on selling your home and move into a different one, you will most likely have to do some repairs/improvements. Your kitchen could use some work, as well as bathrooms, landscaping, and other places in the house. Even though you renovate, you may not recoup all the costs. Some updates lack a return on investment. Be sure to know which updates will truly add value to your home and can give you a return on your investment.

  The housing market is filled with myths just like anything else. If you believe every myth you come across, you’ll overspend and won’t end up in good graces with yourself. Find a home that meets your needs and wants, a home that is good for you and your future. Good luck!

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