We're buying what we can, rather than what we need, and it's gonna cost us again!

What is the cost of peace? 

 

Ask a Buddhist monk. There is no price.  

It appears, regardless of how much digging I do, that the real estate market is truly recovering.  At this point in the time, many of us have 'learned our lesson' having overextended ourselves. We've paid the price, financially as well as emotionally. In fact, we didn't just buy our dream home...we had encumbered our peace.  So what now?  

Right now, tens of thousands of people throughout the US are ready and eager to re-enter the real estate market.  So, buyers talk to lenders, determine how much they can afford, then start shopping for their new home.  Lenders are looking at, among other things, the buyers "ratio".   

Debt to income ratio is just that; a ratio or percentage of income that will go toward debt after a mortgage loan is funded.  For example, a buyer's income is $5,000 per month.  If, including the new mortgage payment, the buyers monthly debt is $2,500 the 'ratio' is 50%.  Personally, I have a 'magic number' that gives me peace.  That number is a number that is much, much lower than most others. I'm suggesting an alternate point of view.  Don't buy what you can afford! Buy what you need, and with that...your peace of mind.

Various mortgage programs, interest rates, etc. are determined in part by this ratio.  So what?  What does this have to do with peace, needs, and wants?  Just this: Lenders approve loan applications to a limit at which they feel comfortable that a client will be able to repay the debt.  There is one world in that sentence that doesn't really jump out, but it really needs to, and that is limit.  So buyers start looking for a home at or near their limit!  They then determine which home, at or near their economic threshold, would be best.  In my eyes, that process or sequence is backward.  Let's try something new:

1. Talk, listen, think, and determine what features you need in a home.  
2. Differentiate what you need from what you want or would 'like to have'.  
3. WRITE IT DOWN! It's simple: Must Have vs. May Have. Writing helps to distill your thoughts. 
4. Get with a lender that you trust. Learn what you qualify for. Set your budget. Stick to it.
5. Go buy your home. 

You may discover that by sticking with what you need...you can move into the neighborhood that you love.

You may discover that by sticking with what you need...you can afford to have your spouse work less.

You may discover that by sticking with what you need...you can afford...your home!

Just because you CAN buy at a certain price point; just because you CAN afford a particular monthly payment doesn't mean that you should.  In my list of needs vs. wants, peace and security are at the top. After that, I start thinkin' about bedrooms, bathrooms, and living space.

I'll leave you with these little tastes of wisdom:

“It is the preoccupation with possessions, more than anything else that prevents us from living freely and nobly.” 

― Bertrand Russell

“Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for - in order to get to the job you need to pay for the clothes and the car, and the house you leave vacant all day so you can afford to live in it.” 

― Ellen Goodman

Until next time, and thank you in advance for remembering me when the topic of real estate arises.

Andy Blasquez ~ The last Realtor you'll ever need to look for.
DRE# 01826135

www.andyblasquez.com

Email me at andy.blasquez@gmail.com
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