Buying a home is not like buying other stuff

You’re a smart shopper.  You set a budget, make a list of the features you want and set out comparison shopping to get as much as you can for your money. I suppose that’s how all savvy consumers shop.  The difference is a home purchase is life changing.  You’re adding a near permanent financial component to your life plan and all subsequent decisions are subject to that influence. In fact, buying a home is more like having a baby than buying a TV.

Shop for housesWhen you buy a television (or any large consumer item…I’m a guy so a big screen TV works for me) you look at features, size, and the benefits of all the bells and whistles. It’s exciting and a little seductive.  You get a budget in mind, but the one you want costs a little more… OK, this may take an extra month or two to pay off, but this would be good for family movie night, we would spend more time together – rationalize, rationalize, rationalize. Cha-Ching! You might be surprised at how many homes are bought this same way. A trip to the lender to find out how much you have to shop with, then driving around comparison shopping to get the best one for the money. Then BAM!! You’re in deep.  And nobody’s there trying to talk you down off that ledge.  Heck, even Mom and Dad are on board, because home ownership has always been the responsible path.

Ready, Fire, Aim!

Here’s the thing: Home prices have been pushed to the very edge of affordability and now require an extraordinary financial commitment.  Buying a house impacts your life well beyond the pleasure of the dwelling itself. It’s not about square footage, crown molding, granite counter tops, or the pool in the backyard. A home purchase plays a huge role in dictating the outline of your life, NOT only your lifestyle.

Am I making this sound serious?  A little too much?  I don’t think so.  Go have a couple beers with someone who got it wrong.  The first step for the serious home buyer… deep thinking! (you might take notes on those thoughts).  Here are four discussion points to get you started…

  • TAKE STOCK OF YOUR DAILY LIFE: Consider everything about your life that demands your regular attention.  Think time, relationships, and money. Student loans, throwing a party for your friends 40th, car payments, weekend getaways, clothing, family gatherings, and all the routine and memorable moments that make up your daily life. While home ownership can make an awesome contribution emotionally to your day-to-day lifestyle, overextending yourself financially will completely unravel any benefit. A home also takes time and discipline to care for.  Not everybody really wants to trade free time for mowing, trimming, and raking. The responsibility is far more than just picking up after yourself.  Poorly maintained homes are not a good financial choice. I thought I was going to love having a big yard… have you ever discovered you didn’t like something as much as you liked the idea of the thing?
  • PLAN FOR SPECIAL TIMES: What about the stuff you daydream about… travel, hobbies, special events, and the things that make life extraordinary. These are the first to go for the new house poor.  Yes, house poor is a thing and it’s an unhappy place.  In the past decade, we have seen record numbers of unhappy house poor and you probably know some of them. Talk to them; ask about their experiences – for example, are they still married? There’s a pitcher of cold water for you.  Set time and money aside for occasional magnificent moments… and be sure to make them happen.
  • DREAMS, AMBITIONS & THE OCCASIONAL STUMBLE: Do you have any special ambitions? Go back to school, start a business, or find a new job? The financial pressure of spending all you can afford leaves little room for you to take any chances…and good stuff comes from taking smart risks.  And leave room for financial setbacks, an illness, or loss of a job. A life that is one mishap away from financial ruin is stressful.
  • MAKE A LIFE PLAN:  Imagine the life you want to live.  Talk about it.  Write it down on paper, look at it, and think about what it will take to live that life. How much time? How much money? This is an idea that people struggle with… planning their life.  Sounds a little ominous.  The truth is you don’t really want a firm plan to follow.  It’s OK to imagine, guess, and be completely wrong. You can make changes and swap out bad ideas for good ones at any time. However, it’s much better to aim at the things you think you value and make course corrections rather than simply drift. Families that drift do things like buy a house, and then decide they really would love to find a job in another city or start a business. But now they are no longer in a position to make those choices.

Align Choices with Values: It’s not always a decision to buy or not. In fact, the more challenging decision will be your choice of homes.  Is there an option that doesn’t require all you can afford – but instead leaves room for your other priorities? In my opinion, dream homes cost too much, not just in dollars, but in the sacrifice of other worthy life choices.

Why do you need to do this? If you don’t and you do it backwards, the purchase of your home and the financial commitments you make to that dream home will dictate your life. The house will come first before your other ambitions.  Oh, that is a lot like having kids.

Enter into the home buying process with your version of the American Dream.  Then match your home choice to your idea of the well-lived life.