This is a question that is often very emotionally driven, whether it is a first home, new/dream home, retirement home, or home questions arising out of divorce. We call it an emotional vs. a financial decision. Why is that?
If changes are due to divorce, the possibility of “losing your home” is added on top of the whirlwind of emotions around what is already a disruptive, chaotic, and emotional experience. When we feel like our lives are out of control, we try to hang on to anything we feel we can control, or to what is familiar and feels safe to us. Quite often those feelings get tied up in keeping the marital home.
- Sense of Security:
We think it is also because a home represents a sense of security and safety, rather than simply providing shelter. Thankfully most of us actually have and can afford some type of housing, regardless of our dissatisfaction at the moment.
- Feeling Settled/Adulting:
For individuals and couples who want to buy a first or newer/bigger home, or are relocating, the drive to “find a new home” can be intense. For some, it is connected to feeling settled or is representative in some way of adulthood.
So, how do we decide what we should do in our current situation? Here are Three Steps for Making Homebuying Decisions:
- Determine your current needs:
Obviously, you must have a roof of some sort over your head for yourself, family members, & pets, etc. What is the minimum that you must have in order for you and your family to feel safe and secure? Make a Minimum Requirements List. While you are making lists, you might want to add a separate Wish List.
- Decide what you can truly afford:
If you are going through a major life transition like divorce, starting a career, relocation, etc., a key task is to have a good, realistic picture of other necessary living expenses first.
- Vehicle to get to work/schools. Not just the cost of the vehicle, but gas, insurance, repairs, etc.
- Insurance and Medical Costs
- Education expenses
- Food and clothing
- Contributions to retirement/college plans (if applicable)
Home Purchasing Questions: Once you have a really good idea of what your other expenses/budgetary needs are, you can look at:
- How much money have you saved or is available for a down payment?
- Are you able to find anything that meets your needs in the area you want or need to live in?
- Will you qualify for a loan? How much?
- Can you afford the taxes, insurance, maintenance, and upkeep?
- Do you think you will remain in this location for the next five years or so?
- Decide if the timing is best for your life and situation:
- Is it the right time, right place, right price?
- Are you having to s-t-r-e-t-c-h your finances to be able to afford what you fall in love with?
- Will you still have enough cash available after purchase to cover emergency expenses, i.e., three months’ worth of expenses?
- Does it make more sense to rent a property (or another housing alternative) until you have other questions answered first?
These are some of the questions or considerations that we encourage our clients to think through, in order to evaluate the decisions around new home purchases, or keeping the marital home. While we recognize the emotional needs that drive our desires, it is crucial to long-term success that we stop and think through the various pros and cons before making a final decision. These steps will help you make a start to that process.