There’s an immense sense of accomplishment that comes with buying a home. Unfortunately, there’s often a lot of stress as well. Buying a home means moving, a prime source of stress by itself. It also means a significant financial commitment, with years of future payments. And of course, there’s the potential for things to go south in a hurry, such as last-minute contract changes or appraisals that come back too low. Add all of those elements together, and you’ve got the perfect recipe for stress.
So, what can an anxious homebuyer do? How can you manage the stress of buying a home? Here are four simple steps to help you cope.
Step 1: Be patient
It shouldn’t be a secret that a home is (or at least should be) a long term investment. It’s expensive and time-consuming to buy and sell, so you should plan to keep the property for at least 10 years to help average out your costs over time. Don’t rush into something because you’re afraid of missing out. Instead, take a steady, logical approach.
You may have started researching potential locations and agents months in advance, and it may be months more before you’re ready to pull the trigger on a new home. That’s fine! Buying a home takes time, but it’s well worth pacing yourself.
Step 2: Do your research
Forewarned is forearmed, as the old saying goes; the more you know about your situation, the less likely you are to be anxious about the unknown. Doing your research ahead of time can dramatically lower the amount of stress you’re under throughout the home buying process. We can break it down even further by looking at the different things you need to know at each stage of the home purchasing process.
Before your purchase
The research and preparation you do before even beginning the home buying process are crucial. The more prepared you are at this point, the less stressed you’ll be later on. Unsurprisingly, the two most significant things you can do to reduce stress at this point involve money.
The first is to get to know your credit score. It’s not a stretch to say that almost the entire system of financing a home, calculating a down payment, and deciding on the length and terms of a mortgage rests on your credit score. Knowing your exact score takes much of the guesswork out of the process. If you know your credit score, you’ll have a much better idea of the rates you should get and the size of the loan you should qualify for long before you enter the doors of a bank. It may seem like a lot of work to understand your score and what it qualifies you for, but it simplifies the rest of the process.
Second, you need to get your finances in order. It would be best if you planned for all contingencies upfront. If you have consumer debt, like credit cards, car loans, or student loans, you should try to pay those off first before jumping into the real estate market.
The last thing you want to do is over-leverage. Over leveraging means to buy the most expensive property you can afford. Just because it’s how much the bank approved doesn’t mean it’s how much you should spend. Buy something you can afford without putting your back up against a wall.
Make sure that you keep some assets that you’ll use to buy your home easily accessible. You can ‘stay liquid’ by maintaining on-hand assets in the event of an emergency or unexpected expenses during the closing process. A lot of home buyers want to keep their mortgage balance as low as possible so they use absolutely all their cash as the down payment, leaving their bank account bare. But in doing so, they don’t have the money to deal with home maintenance or repairs. Remember, your mortgage probably has pre-payment benefits, so you can always apply some of that cash toward the mortgage if you feel you kept out too much money.
While looking for a potential home
If you’re well-prepared, you’ve gone a long way towards making the rest of the process as stress-free as possible. As you begin to look for a new home, these two essential tasks will help keep you on the right path.
First, you should seek mortgage pre-approval. To do this, you can find a mortgage broker (or banker) you can trust and get them to pre-approve you, which means to perform an in-depth review of your financials. Ask them outright to identify any potential problems in your application so you can address them upfront. There’s nothing more stressful than making an offer (or worse, removing purchase conditions) only to learn there’s a problem with your letter of employment or down payment. If you have a financial issue, it’ll come up eventually, so it’s better to learn about it now and address it on your terms.
Another great way to tackle looking for your new home is to create a decision matrix. There are a ton of variables to consider. Some matter, some don’t. Ask yourself questions like: do you want a dishwasher? Do you need to be close to schools? Should it have a beautiful backyard? It can get even more complicated when you’re buying with a partner or spouse.
It’s impossible to keep it all perfectly straight in your mind, so don’t. This is where a decision matrix will really save the day. You list upfront out all the ‘must-haves’ and ‘nice-to-haves’ and decide how much they’re worth to you. You bring the decision matrix to each viewing and compare all the properties fairly. That way, you won’t get taken in by the beautiful crown mouldings and stainless steel appliances when everything else is all wrong.
Step 3: Hire the right professionals
Choosing a partner for the rest of the home-buying journey is vital because purchasing a home isn’t something you do alone. There are buying and selling agents, home inspectors and appraisers, mortgage brokers, lawyers, insurance agents – all involved in the process.
While it’s crucial to work with the right people, there’s a different way to view the whole situation. These are all professionals, well-experienced in their fields. It may be your first home buying experience, but it is not theirs. Rely on their knowledge and expertise. Ask lots of questions, because you’re learning a whole new skill and investing a lot of money all at once.
Relying on professionals doesn’t mean you don’t do your research or make your own choices. Instead, it means that you use their services to reduce your stress. Trust your experts to alert you to problems, and to advise you on what you can to do to resolve them.
Once you’ve picked someone, you’ll also need to understand what your arrangement covers. You’ll have a purchase agreement – what does it cover? Is there anything it doesn’t cover? Is it comprehensive, or does it leave some areas uncomfortably vague? A high level of detail with a professional, experienced agent will give you a robust framework to handle any potential problems further down the road.
Step 4: Read the fine print
In every step of the process, you will be signing relevant documents. From the agreement with your agent to contract negotiations, paperwork is frequently the most stressful part of the whole process, and the work you’ve done to make it as easy as possible will pay dividends at this point.
On a related note, ask questions! A reliable agent will go a long way to shoulder the burden here, but you may need to navigate contract adjustments and provide additional documentation; always ask questions if you’re unsure.
Your choices are your own. Be confident in your own decisions, and don’t fall into the trap of second-guessing yourself. Throughout the home buying process, there are several points worth remembering to keep your anxiety levels nice and low, such as considering the timing.
Markets shift, and people change their minds. All along the process, you’ll find that you may need to be flexible and adjust your expectations. Know which things are real “must-haves.” The smaller your list, the more flexible you’ll be, and the less stress you’ll have.
Talk to your agent about potential problems. Talk to friends and family about what you need and don’t out of a new home. Talk to someone medically, if your stress and anxiety are too high. At every stage of the process, communicate with people who can help professionally and personally.
You’ll need lots of research, professional help with different stages of the process, and a healthy dose of self-confidence. With those factors on your side, you’ll find managing the stress of purchasing a home a much easier task.