Home Buying Kit For Dummies. Eric Tyson

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СКАЧАТЬ Your monthly rent seems dirt-cheap by comparison.

      

You must compare the monthly cost of homeownership with the monthly cost of renting. And you must factor in the tax savings you’ll realize from homeownership tax deductions. (We show you how to make these calculations in Chapter 3.) But you must also think about the future. Just as your educational training affects your career prospects and income-earning ability for years to come, your rent-versus-buy decision affects your housing costs — not just this year, but also for years and decades to come.

      Fretting too much over job security

      Being insecure about your job is natural. Most people are — even corporate executives, superstar athletes, and movie stars. And buying a home seems like such a permanent thing to do. Job-loss fears can easily make you feel a financial noose tightening around your neck when you sit down to sign a contract to purchase a home.

      Although a few people have real reasons to worry about losing their jobs, the reality is that the vast majority of people shouldn’t worry about job loss. We don’t mean to say that you can’t lose your job — almost anyone can, in reality. Just remember that within a reasonable time, your skills and abilities will allow you to land back on your feet in a new, comparable position. We’re not career experts, but we’ve witnessed many folks bounce back in just this way.

When losing your job is a high likelihood, and especially if you’d have to relocate for a new job, consider postponing the purchase of a home until your employment situation stabilizes. (If you haven’t demonstrated a recent history of stable employment, most mortgage lenders won’t want to lend you money anyway — see Chapters 6 and 7.) When you must move to find an acceptable or desirable job, selling your home and then buying another one can cost you thousands, if not tens of thousands, of dollars in transaction fees.

      Buying when you expect to move soon

      People move for many reasons other than job loss. You may want to move soon to advance your career, to be nearer to (or farther from!) relatives, to try living somewhere new, or just to get away from someplace old.

      Unless you’re planning to hold onto your home and convert it to a rental when you move, buying a home rarely makes sound financial sense when you expect to move within three years. Ideally, stay put for at least five years.

      Succumbing to pushy salespeople

      When you buy a house, you’re the one who’ll be coming home to it day after day — and you’re the one on the hook for all the expenses. Don’t ever forget these facts when you plunge into the thick of possibly purchasing a home. If you have lingering doubts about buying a home, apply the brakes.

      

Many people involved in home-buying transactions have a vested interest in getting you to buy. They may push you to buy sooner (and buy more) than you intend to or can afford, given your other financial goals and obligations. The reasons: Many people who make their living in the real estate trade get paid only if and when you buy, and the size of their earnings depends upon how much you spend. In Chapter 9, we show you how to put together the best team to assist you in making a decision rather than push you into making a deal.

      Ignoring logistics

      Sometimes, when looking at homes, you can lose your perspective on big-picture issues. After months of searching, Frederick finally found a home that met his needs for both space and cost. He bought the home and moved in on a Saturday. Come Monday morning, Frederick hopped in his car and spent the next hour commuting. At the end of his workday, it was the same thing coming home. He was tired and grumpy when he arrived home Monday evening, and after making dinner for himself, he soon had to hit the hay to rise early enough to do it all over again on Tuesday.

Initially, Frederick hoped that the trying traffic was an aberration that would go away — but no such luck. In fact, on many days, his commute was worse than an hour each way. Frederick grew to hate his commute, his job, and his new home.

      

When you buy a home, you’re also buying the commute, the neighborhood, its amenities, and all the other stuff that comes along for the literal and figurative ride. Understand these issues before you buy. In the end, after 18 months of commuter purgatory, Frederick sold his home and went back to renting much closer to his job. Forgetting to consider what the commute from a home to his job would entail was an expensive lesson for Frederick. Don’t make the same mistake Frederick made; take your time and consider all the important factors about the home you’re thinking about purchasing.

      Overbuying

      Many first-time home buyers discover that their desires outstrip their budgets. Nelson and his wife, Laura, had good jobs and together made in excess of $150,000 per year. They got used to buying what they desired — they ate at fancy restaurants, took luxury vacations, and otherwise indulged themselves.

      When it came time to purchase a home, they spent the maximum amount and borrowed the maximum amount that the mortgage person told them they could. After the home purchase, Laura got pregnant and eventually left her job to spend more time at home. With the high homeownership expenses, kid costs, and reduced household income, Nelson and Laura soon found themselves struggling to pay their monthly bills and started accumulating significant credit-card debts. Ultimately, they ended up filing bankruptcy.

      

Either you own the home, or it owns you. Get your finances in order and understand how much you can truly afford to spend on a home before you buy (see Chapters 2 and 3).

      Underbuying

      Remember in the story Goldilocks and the Three Bears how Goldilocks had difficulty finding porridge to her liking? In one case, it was too cold, and in another, too hot. Well, just as you can overbuy when selecting a home, you can underbuy. That’s what Nathan and Rebecca did when they bought their first home. They believed in living within their means — a good thing — but they took it to an extreme.

Nathan and Rebecca bought a home whose cost was far below the maximum amount they could have afforded. They borrowed $70,000 when they could have afforded to borrow three times that amount. They knew when they bought the home that they’d want to move to a bigger house within just a few years. Although this made the real estate agents and lenders happy, all the costs of buying and then selling soon after gobbled a huge chunk of Nathan and Rebecca’s original down payment.

      Buying because it’s a grown-up thing to do

      Peer pressure can be subtle or explicit. Some people even impose pressure on themselves. Buying a home is a major milestone СКАЧАТЬ