When to Compromise & When to Stand Firm
Before we start it is important to understand there are a few parts and pieces of the home purchase process that you should never compromise. They are, in some particular order, the following:
- Your Mortgage Professional
- Your Financial Plan & Budget
- Your Real Estate Agent
Comprise here – like choosing a mortgage lender based solely on interest rate or a real estate agent based on how much commission they will rebate at closing – will yield the same results as the craps table would.
Sometimes you win, but most of the time you lose.
The beauty of sticking firm behind your “no compromise” list is that the pros working for you will do a lot to make sure you make the right compromises.
Traditionally, first-time buyers face choices between price, location, size, setting or school district.
Once you’ve determined the order of your preferences and priorities – or, in other words, what you are willing to compromise on first – you are in a better position to make the right choices.
If you have location as your #1 priority, yet buying in that location will price you out of several of your other priorities, then you might have to compromise in several ways:
- Look for a different home type within the community, such as a smaller single family home, a townhome or condominium. Decide if you can live with one less bedroom or other features on your list.
- Consult with a lender or a financial planner to discuss your options for increasing your budget. While no one should overspend on a home, you should recognize that going $10,000
above your price range when you’re financing your purchase with a 30-year fixed-rate loan will actually add only about $30 to your monthly payment.
- Lower your expectations about the condition of the home. While everyone prefers a move-in ready home, you can often get a better deal on a home that needs some cosmetic repairs. Do your legwork though, cosmetic repairs might not be so cosmetic once your dig deeper.
First-time homebuyers all face the same tug-of-war. Home price, size, location, commute and amenities all grappling for the most attention. Grappling for importance and vying for number one on the priority list, all the features seemingly have equal importance.
They do not, however, ultimately have the same priority. Something or somebody has got to give, choices have to be made and, undoubtedly, the first of many compromises will be reached.