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1. Buy for the long run<\/h2>\nA home is often the biggest financial investment you\u2019ll make in your lifetime. A recent Zillow analysis reports that the typical American homeowner has 40% of their wealth tied up in their homes. Several years ago, I wrote\u00a0a complete guide to financial planning\u00a0on one index card, which\u00a0went viral\u00a0and later became a book: \u201cThe Index Card: Why Personal Finance Doesn\u2019t Have to Be Complicated\u201d (co-written with Helaine Olen).<\/p>\n
Now, following up on my original index card, I\u2019ve written a guide on buying a house. Below is the housing index card \u2014 a handy resource to print and take with you as you look at houses or think about buying one \u2014 plus some additional advice as you contemplate making the big decision.<\/p>\n
1. Buy for the long run<\/h2>\nA home is a significant investment, not to mention a linchpin of stability. According to the\u00a0Zillow Group Consumer Housing Trends Report 2017, the majority of Americans who sold their homes last year had lived in their home for at least a decade before selling.<\/p>\n
Some are even staying for the long haul. Almost half (46%) of all homeowners are like me \u2014 living in the first home we ever purchased. In short: Buy a home you want to live in for at least five years \u2014 one equipped (or ready to be equipped) with the features and space you need, both now and in the future.<\/p>\n
Your home is more than a financial investment; it\u2019s where you sleep, eat, host friends, raise your children \u2014 it\u2019s where your life happens.<\/p>\n
The housing market is too unpredictable to buy a (primary) home purely because you think it will net a big short-term financial return. You will most likely be living in this home for several years, regardless of how it appreciates, so your priority should be finding a home that will meet your needs and help you build the life you want.<\/p>\n
Today\u2019s housing market is short on inventory, with\u00a010% fewer homes<\/a>\u00a0on the market in November 2017 than in November 2016.<\/p>\n So, focus on finding a home you can afford that meets your needs \u2014 but don\u2019t get distracted by shiny features that might break your budget. Nice-to-have features often drive up the price tag for things you don\u2019t particularly value once the initial enjoyment wears off.<\/p>\n Make a list of your basic needs, both for your desired home and for your desired neighborhood. Stick to finding a home that meets these needs, without buying extra stuff that adds up.<\/p>\n It\u2019s important to set a budget early \u2014 ideally before you even start looking at homes. In today\u2019s market, especially in the more competitive markets, it\u2019s incredibly easy to go over budget \u2014\u00a029%\u00a0of buyers who purchased last year did.<\/p>\n The most common culprit? Location. Zillow\u2019s data indicates that urban buyers are significantly more likely to go over budget (42%) than suburban (25%) or rural (20%) buyers.<\/p>\n There\u2019s nothing inherently wrong with that. Local schools matter and psychologists tell us that a short commute improves your life. But be realistic about your local market and yourself. Know what you\u2019re willing to compromise on \u2014 be it less square footage, home repairs or a different neighborhood.<\/p>\n If you can afford it, a 20% down payment is ideal for three reasons:<\/p>\n4. Set a budget and stick to it<\/h2>\n
5. Aim for a 20% down payment<\/h2>\n
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6. Keep a six-month strategic reserve<\/h2>\n