Should You Buy a House Even if It Isn't Your Dream Home?
by Christy Bieber | Updated July 19, 2021 - First published on June 3, 2021
Here's why holding out for your dream home could be a big mistake.
If you're like many people, you likely have an idea of your "perfect" home. This dream home may be in a certain location, be a specific size, or have special features that you're interested in, such as a playroom or a swimming pool.
Unfortunately, finding your dream home -- or even one close to it -- isn't always easy, and it's sometimes downright impossible. You may not be able to afford homes like the one you've been envisioning, or they may not exist in the area where you want to live.
If you're trying to buy a house and find yourself in this situation, you're left in a difficult position. You'll have to decide whether to make the purchase even if it's not your perfect property or whether you should continue holding out.
To help make that decision, ask yourself a few key questions.
1. How feasible is finding your dream home?
Right now, the inventory of available housing is low, so you may have a hard time finding what you are looking for.
But if homes like the one you want are generally available in your price range and in the area you like, then you may not want to settle. And why should you? Buying a home is a big purchase with lots of up-front transaction costs. It only makes sense that you get your money's worth.
If it's a simple matter of waiting a few months until the perfect home comes along, then you're much better off doing that rather than rushing your timeline and ending up with regrets.
2. Can a home you're looking at become your dream property over time?
Like a lot of people, you may not find everything you're looking for in a house. But you can still make a home your own over time. When you visit properties, don't just look at what it currently offers. Try to see the home's potential.
If you find a home you love but it's missing a pool you've been hoping for or an office that you need, think about whether you could convert one of the bedrooms into an office or add a swimming pool down the line.
3. What would you give up to have your dream house?
It's possible to make your dream house happen. This is especially true if you spend a fortune to build it yourself, buy an existing home that's out of your price range, or relocate to a different area. But taking any of those steps could come with serious downsides.
If you overspend on buying or building a house, for example, you might have to push out your retirement or give up trying to accomplish other financial goals. You could also increase the risk of not being able to pay your mortgage. If you relocate to find your perfect property, that could mean a longer commute. It could also mean having to give up your job or living farther away from your family.
Once you start considering the disadvantages of getting into your dream property, you may just find that it's not so attractive after all. If that's the case, you're better off settling for a home that's just good enough and doesn't come with those negatives.
4. Would you be satisfied with staying in the home you're looking at for at least a few years?
If you're "settling" for a home, you'll want to make sure you're comfortable staying there for at least three to five years before looking for something you like better. If you try moving sooner, you could lose money due to the closing costs you'll pay. And if you haven't lived there for at least two years, you could be taxed at a much higher capital gains tax rate on any profits you make selling the home.
That's why you should plan to stay in your home for a while. So if you are able to get a home at a good price and can wait a while before moving to your dream home a few years down the line, then there's little reason not to jump into buying a house now.
You may be able to benefit from the property going up in value when you sell. Or you may just decide your house actually becomes your dream home after you've started setting down roots.
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