Making your wish list
A good place to start narrowing your priorities is to write everything down that you could possibly want in your new home from the mundane, such as the number of bedrooms and bathrooms to the practical, such as a fenced yard for your dog, to the style choices such as an open kitchen, French doors to a patio, high ceilings, a wood-burning fireplace and more. Don’t forget things that aren’t part of the house, such as parking, a location close to a park or a grocery store or access to public transportation.
Match your budget with your wish list
At the same time that you’re starting the process of narrowing down your priorities, you should have a strong sense of your homebuying budget. A consultation with a lender should generate an understanding of your options for various loan programs and your cash needs. A full pre-approval based on a review of your credit and documentation of your income and assets is required by most sellers, and also gives you the confidence to know how much you can borrow.
Three ways to compromise
More than likely, you’ll need to compromise on something to get your housing payment in alignment with your budget. Other than opting to postpone your home purchase, there are generally three options for compromise:
- Compromise on home style. If you’re determined to live in a neighborhood where home prices are out of your reach for the type of home you’d hoped to buy, you can consider changing your wish list. For instance, consider a townhouse instead of a single family home or perhaps a two-level house instead of a three-level place. If living in the city or in a particular school district means more than anything to you, you could even decide to have your kids share a room instead of having a bedroom for each or to eliminate the wished-for guest bedroom. Just be sure you run the numbers on these choices, because if you decide to buy a condo or a townhouse, you have to include association dues as part of your monthly payment.
- Compromise on condition. Another option for those who don’t want to compromise on the location is to buy an older house or one that needs work. Make sure you budget for future repairs or for renovations that need to be done immediately, but if you can buy a place and live in it for a few years with an older kitchen or floors that need refinishing it might be worth it to live where you want to live and complete the work over time.
- Compromise on location. For some buyers, the house itself matters most. If that’s the case, work with a real estate agent who understands your priorities and knows the area well. If you can explain what you like about your preferred area, such as the mature trees, the parks, the lake or the proximity to restaurants and shops, your agent may be able to find your dream home in a neighborhood that shares some of those qualities.
Shopping for the place where you’ll live for the next seven to ten years or longer takes time and persistence, but the more energy you put into identifying your priorities, the more likely you are to find the home that comes closest to perfection.