Buying the Right Home for You

You’ve found a respectable Tudor in a picturesque neighborhood, with generously sized bedrooms, ample closet space and 2.5 baths. So why do you have a sense of unease—fear, even? After all, the right move can’t feel wrong, can it?

When homeowner Kate Rodenhizer thought about buying a home—and all of the changes it would entail—she felt nervous. “When I’m staring a big change in the face, I definitely get overwhelmed and start panicking, just thinking about all the steps involved and how much upheaval there’s going to be,” she explains. When she and her husband, Scott, started looking for a reasonably priced condo in New York City—no easy feat—the process seemed daunting. From mortgage pre-approvals to inspections to contracts to down payments, it was all a sea of unfamiliarity, which put her way out of her comfort zone.

Kate knew from experience that the reticence she felt was only a natural reaction to impending change. Behind it, she knew, was a world possibility. “Change is energizing, and it’s hopeful. I can’t think of one change that I’ve fretted over that I now wish didn’t happen,” she says.

According to the National Association of Realtors, there were roughly 6.5 million existing home purchases in 2006 at a median price of $222,000. It’s more than likely that a good percentage of these homebuyers felt anxiety similar to Kate’s when they thought about signing on the dotted line.

Buying a home is a huge decision—it’s most likely the biggest financial move you will make during your lifetime. It’s an anchor: It commits you not just to a mortgage payment, but to a living space, as well. If you appreciate feeling grounded and anchored, then it will be a comfortable move. But if you tend to get squeamish at the prospect of commitment, it can feel a bit scary and overwhelming. However, like most other life-changing financial decision, buying a home is a process that is much more doable when broken down into manageable chunks.

Remember that the first 30 days of buying a home can be very different for individuals or couples, as home buying can happen either at breakneck speed or over the course of several months. (It took Kate more than four months to go from making an offer to moving in.) There is no real timetable because the purchase ultimately hinges on many factors, such as the health of the housing market, home inspection results and whether the sellers are willing to make a deal.

The good news is that there are many things along the way—specifically within those first 30 days—that can be controlled. You can control how you approach the process, whether or not you do your “homework” and the final decisions you make. As you start the process of searching for and buying a home, focus attention only on circumstances within your control. The rest—as you’ll see—has a way of falling into place. Using tips from experts and contented homebuyers, you’ll have the knowledge to survive your first 30 days of buying a home.

How Home Buying Begins

Money makes the world go around, so it’s no surprise that the first thing you’ll need to do is receive pre-approval—also called pre-qualification—for a mortgage. A pre-approval lets you know how much a lender will commit toward your home purchase. In addition, it adds credibility and buying power. “Getting pre-approved by a lender lets sellers and agents know you’re a serious buyer,” explains Jack Guttentag, author of The Pocket Mortgage Guide: 60 of the Most Important Questions and Answers About Your Home Loan. Without pre-approval, sellers won’t take your offer seriously; only buyers with their finances in order receive attention.

Guttentag advises buyers to ignore the mortgage companies who solicit, as many offer poor rates and risky mortgages. “Not every loan provider who solicits is a predator, but all predators solicit,” he cautions.

Standard & Poor’s reports that sub-prime mortgages—or loans for less-than-optimal borrowers—accounted for $600 billion, or 20%, of home loans in 2006. Many homeowners have gone bankrupt and experienced foreclosure under the extraordinary terms of these types of loans. You need to be in control of your mortgage options, so it pays to do some shopping for the best rates and terms.

Finding a dependable, ethical real estate agent is your next move. Objective referrals from friends and family can help you narrow down your search. However, if no referrals are available, write a short list of three or four agents and speak to each over the phone. You may be able to weed some out just from the call and you can arrange to meet the others to see if your personalities mesh. However, resist using licensed relatives or family friends out of obligation. When it comes to an important decision like a home purchase, doing business with family, friends and acquaintances often gets sticky.

Homebuyers should surround themselves with positive, smart people. You should create a network of friends and family, and listen to your gut when assembling their “team” of professionals—such as your agent, lawyer, and builder, if applicable—who will guide you through the process. It’s also important to develop a working relationship with the lender. Instead of just signing blindly, have them explain all the details and fees. Never be afraid to ask questions: The language associated with making an offer, financing, and closing can seem convoluted.

Discovering Your Dream Home

When it comes to buying a home, we all have a dream—or at least a general idea—of what our ideal domicile will be like. To help your real estate agent weed out properties that don’t fit your profile, write an inventory or checklist of what you want in your home. If you will share the house with a spouse or partner, discuss your ideas and come to a general compromise.

When Molly Meinhardt decided it was time to stop paying the rent and start making mortgage payments, she asked herself some basic questions: “I had to decide what part of town I wanted to live in, and I had to figure out if I wanted to buy a single-family house or a condo or even a two-family home,” she says. Ultimately, she decided to go with a condo because she didn’t want to have to worry about upkeep and repair.

When it comes to buying the perfect home, remember the old adage: Location, location, location. Choose your neighborhood carefully, says Dian Hymer, author of Starting Out: The Complete Homebuyer’s Guide. “The most desirable neighborhoods tend to hold their value over time, so it makes sense to buy in the best neighborhood you can afford,” she writes. If the price tags are too steep in the best neighborhoods—a common problem for first-timers—then the buyers should check out transitioning neighborhoods undergoing gentrification that have the potential for future demand.

Molly looked in several different neighborhoods before deciding on one in Northern Kentucky because she liked the condo development and its central location. Her neighborhood, though not one of the most expensive, was close to a burgeoning business and entertainment district and she saw the potential for a future increase in property value. “A good place to start your search for tomorrow’s ‘hot’ spots is on the periphery of the most desirable, well-established neighborhoods in your area,” Hymer writes.

You need to consider your future when buying a home: You don’t need to have everything figured out, but it is a good idea to start thinking five to seven years down the line. Unlike generations past, today’s homebuyers don’t live in their first homes forever. Instead, they live there long enough to build equity—about five to 10 years—and move to bigger and better digs as their needs change. After all, the house you need at age 32 may not be the same one you need at age 45.

Buying Old Versus New Homes

When Jeff Paramchuk of Portland, OR, decided to buy a home, he spent some time just looking before he really got down to business. “Know what you are looking for before looking seriously,” he advises. “Take some time to wander through open houses and see what you like and don’t like—but don’t look to buy just yet.” Jeff viewed this perusal stage as research; when he was truly ready to buy, he already knew what he wanted.

It’s very rare that the perfect house will present itself to you, so you need to be a bit flexible when it comes to house hunting. If you’re unwilling to compromise, however, consider building a new home. Most people start from the ground up because either they can’t find the type of home they need in their area, or because they desire options and upgrades not included in the average resale. “You have more control over floor plans, colors, finishes and materials when you build,” says Carol Smith, author of Building Your Home: An Insider’s Guide. Going the custom route—which is usually more expensive—allows for a custom floor plan and specific details like flooring, cabinet and countertop materials.

Even for production or semi-custom—where there are set floor plans to pick from—a homebuyer makes choices. Often, you can contract to purchase a spec home, or one that is being built by contractors for future sale. The earlier in the process you get involved, the more choices you’ll have. For example, your contractor might include Formica countertops in a spec home, but you may be able to upgrade to marble if you are early enough along in the process and don’t mind paying for an upgrade. However, a common glitch when it comes to this is building delays. “Always pad the date they tell you by at least a month,” Smith advises.

Keep Perspective

During your first 30 days of buying a home, you may find yourself rehashing all the “what ifs,” as if you’re trying to talk yourself out of this major life change. “What if the kids hate the new schools?” “What if the house needs major repairs?” “What if owning a home isn’t what I thought?”

Committing to a big-ticket purchase is one surefire panic inducer. “I was really scared about making a 30-year commitment to a bank. I was 34 at the time—it was practically as long as I had been alive,” says Kate. “I finally realized you can’t get too hung up on that number. We’d likely only live here five to seven years, anyway, so why let this arbitrary 30 number keep me up at night?”

Second-guessing change is natural and is simply a product of our fears. The best way to combat this negative is to focus on the positive, because buying a home can be an incredibly fulfilling and fun process. “It’s fun to be able to decide, ‘Yes, I will paint the walls peacock,’ ” says Jill de las Alas, who owns a home in Indianapolis with her husband, Rob.

Imagining the lasting memories you will create in your new home can keep you positive, as well. “Our house is special because for 70 years, people have been cooking, talking, making music and raising their children here, just like we’re doing,” says Jill. “I love that we conceived our children here, and we brought them home from the hospital to this house.”

When you have your eye on a resale property, remember that others before you appreciated the home’s potential and made loving memories there, as well. As Jill quips, “If 70 year’s worth of families could make it work with our home’s tiny closets and quirky bathrooms, we can too.”