Buying a home is one of the major milestones of adulthood, and it’s half a financial goal and half a spiritual leap forward. As the host of the podcast “So Money” for over 10 years, I hear from countless listeners each year as they share their dreams of finding the perfect home.
I have bought 3 houses in 25 years. I have gained experience in various living environments and housing markets in my 20s, 30s, and 40s.
Always remember to take your own personal circumstances into account and seek specific advice from a trusted financial professional. However, sometimes I wish I had known about real estate from the beginning.
1. The home you buy doesn’t have to be your forever home.
I bought my first apartment in New York City in 2004 at the age of 24. It was a small studio on the seventh floor of a condominium on the Upper West Side, above a dive bar. I knew this was going to be my forever home, even though my budget had grown and I was constantly worried about whether I had made the right choice.
From 2009 to 2011, I kept my studio and rented another apartment, but finally sold it in 2014.
In 2011, my husband Tim and I purchased a larger home in Brooklyn. For nine years, we raised our two young children in a Brooklyn apartment that we knew would be our forever home.
But in 2020, we realized we needed more space, a backyard, and a separate school for our son. Signing the contract on a home was nerve-wracking, especially since everything felt so uncertain in the early days of the pandemic.
We currently live on a tree-lined street in northern New Jersey. Unlike the first two places, I wouldn’t say this is our forever home. But we hope this is our home, at least “until the kids graduate and we know what the property taxes will be.” that’s ok.
2. Find local people to work with
I’m really grateful to my new agent. She knows our town’s market inside and out and was our trusted guide in arranging real estate attorneys and inspectors to ensure everything went smoothly to completion.
Homes go on the market on Thursday, showings will be held throughout the weekend, and the deal will close by Monday. You may only have 30 minutes to view a property and it may take several days to make an offer.
Hyperlocal agents understand how a particular area behaves, how pricing works, and what homes are available before they hit the open market.
3. Don’t start looking without knowing how much you can afford.
It’s so hard to scroll through listings and fall in love with a home and get excited about the possibilities without knowing how much you’ll actually be able to use it. I’m sure this has happened to me several times.
So before your imagination starts running wild, talk to a lender early on so you can understand your borrowing capacity and down payment options, and identify any credit or debt issues.
All of these details can affect the interest rate you get when you get pre-approved. Depending on eligibility, some buyers may also be eligible for homebuyer assistance and grants.
Another pro tip: Go through all your documents before it becomes an emergency. The last thing you want is to be frantically reviewing legal documents trying to decide if it’s going to be the biggest purchase of your life. Please ask all questions early.
4. The phrase “dream home” can make an already stressful process even more difficult.
Recently, my 8-year-old daughter asked me, “Why did you and your dad choose us?”
I said it had a lot of what we wanted in a home. It had ample bedrooms, a great kitchen, a garden, and faced a flat street that was perfect for riding bikes and avoiding flooding during storms. I didn’t say it was perfect, because that’s not true. However, we found ourselves happy living here. That was also within our budget.
As you begin the process, instead of asking, “Is this my dream home?” ask yourself these three questions:
Can I see myself here for at least 5-7 years? Will I still be able to save and invest with this payment? Does this suit me now and not who I think I should be someday?
This mindset alone takes a lot of pressure off. This will help you focus on what actually matters (which may be a smaller list than you think).
5. Remove “should” from your vocabulary
Buying or renting is not about whether you do what you should do or what your parents think is “right” or what your colleagues are experiencing. It’s about choosing what is actually supporting your life right now.
There are several reasons why you may want to buy a home now.
You want the predictability of a fixed mortgage, not sudden rent increases You feel ready for more stability You want your money to grow over time and maintain a stable asset, rather than rent checks disappear You want more control over how your home functions in your life You’re planning around your family and future self
However, if you want the freedom to try a new city without being tied down, your career is in flux, or you don’t want to take on the mental burden of dealing with things like upkeep and unexpected repairs, you might want to wait a little longer. The calculations may not work at this point. And it’s not a failure either.
Understanding the “why” can make the rest of the process easier. After all, there are no wrong answers. Only what suits you.
Farnoosh Torabi is one of America’s leading personal finance experts. She is the host of the award-winning podcast So Money, which has garnered over 30 million downloads. She is a popular speaker and author of A Healthy State of Panic: Follow Your Fears to Build Wealth, Crush Your Career, and Win at Life. This book is both a memoir and a guidebook about how fear can be a superpower for achieving true wealth and career success.
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