Buying a home is often seen as a key component of the American Dream. But it can be a nightmare unless you go into it using your head, and not just your heart.
Many people get excited by the prospect of homeownership as a statement of independence from their parents. Others are happy couples, seeking a place of their own. Still more are motivated by the proliferation of so many television shows on HGTV, AETV, DIY, and a host of others with programs like House Hunters, Flipping Vegas, and Renovation Realities.
But there are key lessons to be learned that aren’t always thought of, or mentioned on these media channels. Three are decisions to make before you buy, while the other two are made after the house has been purchased.
BEFORE YOU BUY: “The battle is often won before it is fought,” writes Sun Tzu, who emphasizes planning before warfare. It’s a similar deal for homebuyers, who need to do their homework before they make their purchase. There are plenty of decisions to be made.
1) Think About Your Commute: Before you buy, consider the proximity to work, as well as the commute. Buying a home in the Washington, DC area confirmed this. On the map, I was only 15 minutes from work. But navigating Interstate 66, the Beltway and Northern Virginia roads was a different matter in my car. It was at least an hour’s drive one way, and a second hour on Friday after 3pm. During rush hour in bad weather, it could be three hours on the road. And my wife points out that you should consider the direction of the commute. If you buy a house to the west of where you live, you’ll be driving into the sun both ways.
2) Look at the Schools: You won’t live in a school, but it is often just as important as your home itself. Certainly, everyone wants the best for their kids, and the quality of the local schools is a key component of that. Some may shy away from the taxes that pay for these schools. But a local school is often indicative of the quality of the neighborhood: good schools usually equal a good neighborhood Look here for more details. They show a community that cares about its people. And if the public schools aren’t so good, close proximity to a private school is a must.
3) Consider Resale Value: When one considers the American Dream of homeownership, who ever thinks of selling that dream? But one of the best decisions we made when we bought our first house is to consider resale value. When we purchased our townhouse in Centreville, Virginia, there were so many townhouses to choose from. But my wife insisted on picking the one with the best resale value. Sure enough, a year later, we sold that townhouse for $40,000 more than we bought it, while other townhouses in the neighborhood fell in value.
AFTER YOUR ACQUISITION: The difference between buying a home and living in a home is like the difference between a wedding and a marriage. The former is very exciting, but a short-lived process. The living part is much longer, and takes work to make it work.
4) DIY Projects: Get Advice Before You Start: No house, even the dream house, is perfect. You’ll want to engage in a “DIY” (Do It Yourself) project. They are less expensive than many contractors, but only if you do some planning before you start. While remodeling the bathtub, we knocked too much tile pieces into the drain, and had to work hard to remove them. Had we not caught our error, it might have cost more than a professional remodeler would have charged just to fix the plumbing!
5) Remember Your Tax Advantages: Nearly every college student of mine gawks when they learn in my class that there may be some tax advantages to home ownership. They think that they can’t afford a house until they are in their 40s. These breaks are rarely noted by those who whip through a 1040EZ form. So see what the IRS says here and factor in whether you’ll save on taxes when evaluating the rent vs. purchase, and don’t forget those property taxes you’ll pay when you buy a home as well.
As you can see, there’s a lot to think about when buying a new home. But don’t only get caught up in the ranch vs. cape cod or the garage vs. patio, or whether an extra bedroom and bathroom is worth it. Consider the neighborhood, the commute, the resale value, the DIY projects and the taxes. That way, your first home really can be that dream most Americans aspire to have.