Top Homebuyer Tradeoffs

AAA

Your home affects every aspect of your life, from your financial stability to things you do in your free time. 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 commonly face.

Location

While location is key, 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.

Privacy

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. In a single-family house, factors such as lot size, number of stories, fence height and vegetation can all impact the level of privacy. Homeowners who want to live near the heart of the city often trade privacy for location since urban areas tend to be more densely populated than suburban areas.

Dwelling Type

What kind of financial and time commitments can you put into maintaining the property? Do you want a backyard for parties or pets? Condos and townhomes 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. Since condos and townhomes are often cheaper than houses, first-time homebuyers commonly make the tradeoff of choosing the former over the latter.

Price

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.
Related Articles
  1. Home & Auto

    Understanding Rent-to-Own Contracts

    They can work for you or against you. Here's how to negotiate a fair one.
  2. Home & Auto

    Avoiding the 5 Most Common Rent-to-Own Mistakes

    Pitfalls that a prospective tenant-buyer could encounter on the road to purchase – and how not to stumble into them.
  3. Home & Auto

    Renting vs. Owning: Which is Better for You?

    Despite the conventional wisdom, renting might make more financial sense than you think.
  4. Home & Auto

    When Are Rent-to-Own Homes a Good Idea?

    Lease now and pay later can work – for a select few.
  5. Home & Auto

    The Pros and Cons of Owner Financing

    Details on the upside and risks of this type of deal for both the owner and the buyer.
  6. Credit & Loans

    Avoiding Red Flags with Online Mortgage Lenders

    Using an online mortgage lender can be convenient, but how do you know you can trust one? Follow these tips to make sure the lender is legit.
  7. Credit & Loans

    How To Boost Your Credit Score To Save Thousands

    One of the first steps you should follow before buying a home is to boost your credit score. And how do you do that? Here, we tell you how.
  8. Credit & Loans

    5 Mortgage Loans You Didn't Know About

    These lesser known mortgage loans are often overlooked by potential home buyers.
  9. Economics

    Real Estate: How the Bubble Will Pop

    This real estate bubble is much different from the last one. Understanding it is imperative if you plan on making any investments.
  10. Credit & Loans

    The Hi-Tech Future of Mortgage Applications

    Three sites that are simplifying your path to home ownership.

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!