Purchasing a home is sometimes a balancing act between wants and needs. Finding the right mix is increasingly important as home inventory remains low and interest rates are higher compared to just a few years ago. Yes, you can still find a home that suits your budget and style, but your search will be easier if you carefully consider your priorities.
Start with a list of your homebuying need
A need is something that’s a deal breaker, a must-have that’s absolutely required for you and your family. Everyone’s non-negotiables are different, but your list could include things like:
- A bedroom for each child
- A guest space for a frequently visiting family member, like a grandparent
- Staying in the same community (or moving to one you’d prefer)
- Having a reasonable commute to work, activities or family
- Accessibility or mobility features, such as walkability to stores or restaurants
- An outdoor space for children or pets
Sometimes it’s hard to differentiate between must-haves and hope-to-haves. For example, perhaps two siblings close in age would be fine with sharing a room—and even prefer the company. Or maybe a large kitchen seems like a must, but compared to how much you prepare large meals, a smaller kitchen could work just as well. When you aren’t sure, simply put these borderline items on your lists and circle back to them later. They’ll become clearer in time.
Evaluate your homebuying wants
Your wish list should be realistic and attainable. Understanding your home aspirations also plays three important roles in homebuying:
- It can help you highlight your actual needs
- It can help you narrow your search and stay within your budget
- It can help you decide between two similar homes
Your nice-to-haves can enhance your living experience but are not essential. You should be able to compromise on each, especially if they can be changed or added later. Items on this list can include home features such as:
- High-quality countertops and cabinets
- Underground sprinklers
- A home office
- A fireplace
- Additional bedrooms
- Walk-in closets
- A three-car garage
- A large yard
Your wants can also include other physical characteristics, including:
- New or newer construction
- A specific neighborhood
- A specific style of home (i.e. craftsman)
- A beautiful garden or outdoor space
- Updated kitchen or bathrooms
- A pool
- Hardwood or tile floors
“Don’t wants” are equally important
Finally, consider things you absolutely do not want. Maybe you have a few things right off the top of your head. Maybe you need to reminisce about past living situations. Purchasing a home is a long-term commitment, so make sure you’re not stuck with something that you’ll never be able to fix. Common items include:
- Neighborhoods too far from important commitments (family, work, etc.)
- Busy streets
- Awkward floor plans or yards
- High-maintenance properties
- Homes that face specific directions
- Prioritize your lists
Now it’s time to rank your wants, needs and “don’t wants.” At this stage, you can also share this list with your realtor. When your agent knows what’s on your mind, you’ll receive better home recommendations that also fit your budget. Be sure to ask which additional features would add to the price of a home so you can set realistic expectations. As you create and rank your items, it can be helpful for both you and your agent to divide them into categories.
- Location and neighborhood. These can impact your home’s future value. Be sure to get specific (being close to this school), have some general items (preferred parts of town) and be clear about what you don’t want (perhaps a home with an unfinished basement).
- Property quality, type and size. These categories will influence lifestyle, time committed to maintenance and ongoing costs. Also consider your property preferences (town home, single family, condo, etc.), as well as square feet.
- Features and amenities. Are there any preferred features that will make your home more comfortable or stylish? Your list could contain an energy efficient HVAC or a washer and dryer on the first floor. Make sure you know what’s reasonable within your budget.
Creating a housing budget can be a complex calculation based on many moving parts like market conditions, available interest rates, your income and housing availability. Other costs include property taxes, maintenance, home insurance, utilities and a home warranty or mortgage insurance if you need it. You’ll also need to consider your average monthly living expenses and lifestyle choices. Creating a budget is one part of your homebuying checklist that also includes finding your credit score, determining your down payment and gathering all the paperwork needed for a home purchase.
Once you have a general idea of what you can afford each month, it’s time to reach out to your lender. Your lender can look at your income and down payment and provide advice on potential loan options. They can then help you apply for a mortgage pre-qualification. A pre-qualification isn’t binding, but it can give you a general idea of your price range.
NMLS ID 394275 | DRE ID 01769353
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