Thinking Transition When Buying Your First Home

Thinking Transition When Buying Your First HomeBuying your first home is a big decision, can be a long process, and it is both fun and frustrating at times.  After all, how many six-figure or larger purchases have you made so far in life, and how often do you plan on making them?  It’s OK to be careful, a bit suspicious at times, and excited all at the same time.

With all of the home features, location, price, and transaction things you need to think about, consider one more thing carefully, as it could be one of the most important factors.  Think of it as the Transitioning Task.  This is putting your home purchase into the context of your life’s financial planning.

Calculate the Numbers

There are various studies that put the break-even point of a home purchase anywhere from five to 8 years.  That’s the point where you break even on the costs of purchase and sale of a home and break into profit.  Up until you’ve been in the home that long, you may have been just as well off renting.  This calculation isn’t intended in this article to discourage your home purchase now.  It is introduced into your process to help you in home selection. Take the time to think about the purchase you are going to make and if you are going to be in it for the long haul so that you can reap the rewards of home equity in the future!

If you suddenly realize that you are planning on a major career change four years from now, such as completion of an advanced degree, maybe you want to pass on a home purchase, but it’s your decision.

Plan for now

What this article hopes to do is to help you to “run the numbers,” and possibly adjust your home criteria, thinking of size and price range.  Suppose you’re married and planning on a family, but not for a few years.  You’ve graduated with a degree and found a pretty good job in your chosen field.  Why not just buy a home big enough for that first child now, as you are pretty sure you will stay in this job for at least five or more years?

Just how sure are you though?  What if you get an offer out of the blue at a big salary boost, but it’s in another city or even another state?  What if you find out that you do not like your new job, as it’s not exactly as you expected?  There is any number of reasons for a change in employment or area of residence.  Don’t let doubts like these change your mind, but you may want to let them become decision points instead of doubts.

Think Ahead

When you’re buying a home, especially the first one, it’s usually not top-of-mind to think about selling it.  However, in this situation, it’s a good idea.  If you check into the studies, the easiest home to sell in an area or subdivision is usually the smallest and least expensive one.  Think small, perhaps smaller than you were planning, if you think you’ll be moving within 5 to 6 years.  Buying an entry-level house in a popular neighborhood, you may move forward that break-even point.  It will also make the home easier to sell.

Consider break-even timing and take a careful look at your near future employment and family planning.  No matter what you are planning, keep a sharp eye out for those entry-level homes in more expensive neighborhoods.  It’s a smart move.

Are You Thinking of Buying a Home in Dubois County?

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Situated on a .31 acre lot is this 1000 sq. ft. all brick home. Features include 3 bedrooms and 1 1/2 bathrooms. There is also a 1 car attched garage and rear patio. This is a fixer upper being sold "as is". Included in the sale is the range, refrigerator, washer and dryer. $110,000 Pending

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Listing courtesy of Nathan Hanselman from SELL4FREE-WELSH REALTY CORPORATION.