The Balancing Act Between a House and a Home
Posted by Tim Ryan on Sunday, November 20th, 2011 at 2:28pm.Real estate practitioners are taught from the beginning to strike the word ‘house’ from their vocabulary and instead always use the word ‘home’. Why? Because there is a huge difference between the two. Though the terms are often thought of as one and the same, they are similar to the words ‘listen’ and ‘hear’. Two totally different things, right? A house is a shelter, four walls and a roof. Even though you may live there, sleep there, eat there, etc. there is not an emotional component.
A home is a place where memories are made. A home feels safe and secure. As you can see, the primary difference between the two is the emotional component. It has nothing to do with cost, finish, or furnishings. When buying a home, finding ‘the one’ triggers an emotional response.
Buyers begin placing their furniture, imagining things like holidays spent there, or maybe even future children’s bedrooms. As an agent, it is obvious when we have found the buyer’s home. Their eyes light up, they become more animated, and generally the visit takes longer as we work through which piece of furniture will go where, etc.
Decisions Decisions
Let’s say you find a home with a beautiful pool and just the right layout for your family. That home costs a bit more than a similar home without a pool. But, it is cheaper to buy a house with an existing pool than put one in later. If now you have decided that a pool is a must, do you find a less expensive house that has a pool, but perhaps the layout is not as nice?
Maybe you opt to take on the ‘perfect home’, knowing that you will have to tighten your budget for the first couple years until the payment becomes a little more manageable? There are also several different financing strategies. If you have saved for a decent down payment, maybe instead of putting 20% down, you buy a house that needs a little work and instead put 10% down, using the other 10% cash to do some projects at the home.
Fixed rates are extremely low right now, so this is not common, but you could also purchase a home on an ARM (Adjustable Rate Mortgage) so the first 3 or 5 years would have really low payments. You could then likely need to re-finance at the end of that period to avoid a huge hike in rates. There are several different ways to go about making this work. It is up to you to decide what you are comfortable with.
The Juggling Act
At the end of the day, only you can decide what is right for your family. If your max was $325,000 and the negotiated price of the dream house is $327,000, you are probably okay. On a 30 year fixed at sub-4% rates, that makes about an $8 difference in your monthly payment. However, if $325,000 is your max and there is nothing for $325,000 that meets your expectations, maybe saving for a while longer is your best strategy until you can get into something you truly love.
The numbers keep it logical, while the home itself makes it emotional. There are some hurdles that have logic-based resolutions, usually the larger ones. Oh, and did I mention that this gets even more tricky with each additional person that gets involved?
Call this stereotypical, but usually it goes like this; husband is on the logical side, wife is on the emotional side, and if there is a mother or father-in-law involved, who knows where they will land. It is safe to say that no outsider can decide what is best for someone else’s family, that includes lenders or REALTORS®, but remember….home is where the heart is!
About The Author: Kimberley Kelly is a Palm Springs Realtor who helps buyers and sellers buy or sell La Quinta CA homes. If you're in the market in Southern, California be sure to check out her real estate in Palm Desert website for listings options.
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