One recent weekend I painted my bedroom walls a dark cobalt blue. Then I sent a photo to my cousin who said, “That’s going to be hard to paint over when you decide to sell your house.” I know. And I don’t care. The color makes me happy. My home is small and quirky and nearly 100 years old. It’s a reflection of my personality, but also my biggest investment.
There are lots of ways to think about home ownership. For some it’s an investment or a symbol of accomplishment, while for others it’s a place to set down roots and build a family. Many people see their home as an extension of their lifestyle. There’s no right way to feel about home ownership, but the more you understand what home means to you, the less likely it will make you feel trapped…or pinched.
Owning a home is both a joy and a responsibility. You can paint the rooms any shade you like, renovate and remodel, and choose fixtures that make you smile. Of course, you also have to repair leaky toilets, mow the lawn, and have the furnace inspected. I know, because I’ve done all those things. Not to mention sewing curtains, re-finishing doors, and installing shelving. But beyond being a place of your own, a home can also be a tangible financial asset. So you need to balance what you put into it with what you can get out of it.
The changing tide of home ownership
It used to be that home ownership was a rite of passage into adulthood. Things have changed in the last decade and a half. In the aftermath of the 2008 financial crisis, many people found themselves trapped in homes they couldn’t afford. They had been lured into mortgages beyond their means. When the housing bubble burst, some owed more on their homes than they were worth.
Now, some young adults are questioning the trade-off between home ownership and the freedom to travel, change jobs, or invest for the future. And with the pandemic, homes suddenly became workplaces, too. But remote work also meant that people didn’t have to live within commuting distance of the office. The little white house with a picket fence is no longer everyone’s dream – nor is it within everyone’s reach.
What kind of home to buy – and whether to buy a home at all – is a very personal decision. A home should fit your family’s needs, lifestyle, and budget. With home prices continuing to rise, it’s important to consider home ownership in the context of your overall financial situation.
Navigating your first home purchase
If you’ve never purchased a home before, there’s a lot to think about. Fortunately, there are resources available so you can study up before you take the plunge. Consider taking a homebuying class through a non-profit group or local credit union. There are also lots of resources online where you can learn the basics. And, of course, friends and family members often have great advice, too. Just remember that someone who has lived in the same place for decades may be blown away by the complexities of today’s homebuying process.
When you begin working with a mortgage loan officer and a real estate agent, keep in mind that they pocket a healthy sum of money when a home sale is finalized. So don’t be shy about asking a lot of questions and being honest about what you want. That’s what they’re there for.
Take your time – the home you buy should fit your needs as well as your financial situation. Be sure you understand all the components of the investment you’re planning to make: Balancing your down payment with monthly payments. How an amortization schedule works. The impact of insurance, taxes, and fees. And how to factor in expenses like maintenance, HOA dues, utilities – and paint for the walls.
Owning a home is a wonderful opportunity, but paying for it shouldn’t restrict you from doing other things in life that are important to you. Your financial advisor can help you factor home buying into your financial plan, whether you’re ready to buy now or you want to save for a down payment.
Questions when you’re thinking about home ownership
- Has everyone in your household had a chance to express what kind of house they’d like?
- Which features are you willing to trade off to get what you want in a home?
- How will you handle home maintenance – will you do-it-yourself, or hire tradespeople?
- A mortgage pre-approval can show how much home you could buy, but it’s a good idea to run that number by your financial advisor to make sure it’s consistent with your budget goals.
- If your parents or other family members are willing to help with a down payment, be sure to let your financial advisor know so they can factor that into the budgeting.
- Consider writing down a list of questions to ask your realtor, loan officer, and financial advisor so you feel fully informed throughout the process.
Please contact us at 206.217.2583 or firstname.lastname@example.org if we can assist you or someone you know with financial planning.
Liz is a Late Boomer in the sandwich generation who started an independent writing and brand consulting practice after years as a senior marketing executive. She lives in Seattle, Washington. Her mother lives nearby and her daughter comes home during college breaks.
The foregoing content reflects the opinions of Liz Behlke and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.