Homebuyer Tradeoffs: What Will You Have To Sacrifice?
When you're buying a home, whether it's your first home or your third, you want it to be perfect. Your home affects every aspect of your life, from your financial stability to things you do in your free time to the people you spend time with. It's also probably the most expensive purchase you'll ever make. Yet it seems like you always have to sacrifice something when buying a home. Here are the tradeoffs that homebuyers most commonly face.
IN PICTURES: 5 Steps To Attaining A Mortgage
Location is the one thing you can't change about most homes. Where you choose to buy affects the job opportunities available to you, your commute, your safety, the resale value of your home, where your kids will go to school, how much peace and quiet you will have and dozens of other things.
Since location is so important, you might be thinking that your ideal location is something you should never compromise on. However, people compromise on their ideal location all the time - they move further out into the suburbs even though they work in the city because they want a larger/newer/nicer house for a lower price, for example. Sometimes it's worth making a tradeoff on location to get something else you want. (Learn more about choosing your location; read The 5 Factors Of A "Good" Location.)
The type of dwelling you choose - house, condo or townhouse - will have a major impact on how much privacy you have. Will someone always notice when you're coming and going and whether you're home or away? Will you be able to play your music at the volume you want, turn up the TV and have parties without disturbing your neighbors? Will your neighbors be able to see what you're doing even while you're indoors or in your backyard?
Keep in mind that privacy goes both ways - do you want to be subject to the intimate details of your neighbors' lives?
If you buy a home in a multi-unit building, your level of privacy will vary with the overall size and layout of the building, the quality of construction materials used, your unit's location in the building and the behavior of the community (do people keep to themselves, or does everyone know each other?). In a single-family house, factors such as lot size, number of stories, fence height, vegetation, the location of the home's windows and doors and whether the home is on a cul-de-sac or in a gated community can all impact its level of privacy.
A house will usually offer more privacy than a condo or townhouse, but not always. Homeowners who want to live near the heart of the city often trade off privacy for location since urban areas tend to be more densely populated than suburban areas. (Learn more about what affects your real estate decisions; read Real Estate Deal-Breakers That Shouldn't Be.)
- Dwelling Type
Whether you choose a house, condo or townhouse will also affect your lifestyle, your home's resale value and your monthly finances.
If you choose a condo, it will be difficult-to-impossible to have a backyard barbecue or a nice patch of grass for the dogs - in fact, it may not be possible to have dogs at all.
Condo life means your exterior maintenance responsibilities are limited - there's no repainting the house, replacing the roof or mowing the lawn - but you'll still have to pay for all of these things in the form of monthly homeowners' association fees. You'll also have to pony up extra cash if a major repair comes up and the homeowners' association is short on funds. So while many people think that living in a condo alleviates the burden of having to suddenly pay for major home repairs, whether that ends up being true actually depends on how well your homeowners' association is managed. (Learn more in The Hidden Costs Of Home Ownership.)
Also, condos and townhouses can be more difficult to command top dollar for when you go to sell because there may be other units for sale that are identical to or very similar to yours. The larger your building, the more true this becomes. The same can also be true in neighborhoods of tract houses, but even tract houses with the same floor plan will often have more distinguishing features than condo units within the same building.
Since condos and townhouses are often cheaper than houses, first-time homebuyers commonly make the tradeoff of choosing the former over the latter.
The cost of the home ranks at the top of most people's lists in importance. A better location and nicer amenities will increase a home's price. If you're not wealthy, you'll have to sacrifice some of the things you want to stay within your budget. Be realistic about what you can get for your dollar and remember to rely on your own calculations of what you can afford, not your lender's estimate. (For more, see Mortgages: How Much Can You Afford?)
The Bottom Line
It's rarely possible to find a completely perfect home for your needs, tastes and budget, and it's OK to make tradeoffs. Think about your priorities before you start your home search, but be flexible and willing to change your mind once you see what your true options are - viewing actual properties can shift your priorities. And remember that if you can only find places that require too many compromises, it's OK to wait - new homes come on the market every day. (For more helpful tips, see Top 8 House-Hunting Mistakes.)
Catch up on your financial news; read Water Cooler Finance: The Ups And Downs Of A Double-Dip Recession.