A Guide To Buying Your First Dream Home
Congratulations! You’re finally there! Buying your first home, and you must be excited! The woodwork is going to be shiny, the rooms will be very open, enormous windows on all the walls to let the light in… Your fireplace will be on all the time while you’re having dinner across the room from it. Your dream home sounds amazing, but you have to be aware that this is your first dream home. Sorry to steal your cake, but you have to take a step back and face reality. This is your first home which means that odds are it isn’t going to be your exact dream home. As a matter of fact chances are you’re still a couple of homes away from your dream one. And that’s okay!
The trick here is to find perfect balance between what your dream home looks like and your budget. The fact that your first home isn’t going to be your exact dream home shouldn’t bring you down. To the contrary, this should be exciting – knowing that you will be upgrading throughout life as your pay increases, smart saving plans kick in, etc. Here’s a few things to consider when you start venturing into your first purchase.
Don’t Skip Starter Homes
This is a common mistake. A starter home is called like that for a reason. Many have tripped on their ambitions and dreams and skipped the starter home, going instantly to that dreamy, high class, home. In some cases, people who did it this way could actually afford it, to which I say “Good for them!”. But in other, more frequent cases, people grabbed a bigger bite than they can swallow and got stuck with a gorgeous home they can’t afford. In that unfortunate scenario those people end up selling those homes soon after, losing a lot of money in the process.
Get a starter home. If all goes well you won’t be in it for more than 5 years. Just enough for your career to have a jump start, your savings to grow. Add to it the value of your starter home and you got yourself funds to upgrade to something far closer to your first dream home!
Older or Newly-Constructed Homes
Older homes would be a home that isn’t new! Ha! This would include homes that were built from even 1920s up until early 2000s, meaning that these homes were already owned by someone. On the other hand, you have newly-constructed homes that did not have an owner yet.
If these two had the same cost, most of us would gladly jump at a newly constructed one, right? The problem here is that the newly constructed ones can cost up to 20%-30% more than an older one. Going for an older home would allow you to save a much bigger chunk of resources for that first dream home of yours!
Adding Value to a Purchased Home
I am all about “doing it yourself”. What this means is that I am very much for buying a place that needs work done. This will allow you to save money, and later on increase the value of the home by putting work in it. People usually buy homes that have almost no work needed and thus pay the higher price. I’d love to pay less, get a house (or a condo), and overtime work on it bit by bit. This way I will get more for my dollar, investing in it whenever I have extra funds laying about. Ultimately, when it comes to selling a place to upgrade to a new one – it will be worth more than it was when you bought it. Extra cash! One step closer to that first dream home of yours!
House vs Condo – First Dream Home
The choices will be endless, and your mind will be jumping from one potential home to another. Whilst this is happening to you – keep an open mind. Even though your heart might be set for a single house, allow yourself to consider alternatives. There actually might be a condo in a perfect location, with a perfectly large balcony that has the perfect view. It’s not a house, but it’s cheaper – and maybe just as good. All of this would bring you one step closer to that dream home of yours.
Price vs Location
Once the choices narrow down to this it can turn into a nightmare. You might find the perfect first dream home in the most undesirable of locations. Also, you might find a location that you love without any homes you can afford. Of course, all of us would like to live in the best possible location. But sometimes that will be impossible, at least for starters, and certain compromises should be made. The bottom line is that you indeed can live in a slightly less liked location – but you most definitely cannot live in a home you can’t afford.
“Must-Have” vs “Would Like To Have”
This is the least fun part of the entire “buying your first dream home” process. It is the moment where you need to analyze your current situation. I have a wife and a newborn baby ergo I will need one bedroom for us and one for the child. That could be sorted into the “must-have” category. Add to this your desire to have a third bedroom and a study room where you can write your book and you got yourself a “would like to have” scenario. You definitely can survive without it meaning that getting it is a luxury, and at that a luxury you can’t afford.
Prioritize on the must-haves and make a list of them. A clean kitchen, enough space, enough bathrooms – those are all your must-haves. Once you checked all of those, take a look at the “would like to have” and see which ones you can afford.
Best of luck to you!