Buying a house is one of the most important and biggest purchases that you will ever make, so it’s not surprising that the process can create extra stress and anxiety. From worries about not having any cash left over after making the down payment, to deciding if you want a fixer-upper, or just hoping to be in the right place at the right time, there can understandably be some anxious moments. In fact, a study by Homes.com showed that two in five first-time buyers experienced anxiety and almost half were nervous throughout the process.
With those things in mind, starting the home-buying process while being mindful that there will invariably be some stressful moments is a good place to start. Let’s start by looking at some effective ways to manage your emotions and make smart moves throughout the process.
How to Handle the Anxiety of Buying a House
Remaining mindful includes expecting a few bumps in the road as well as having to interact with different personalities. This includes real estate agents, mortgage lenders, associations, and sellers to name a few. Keep in mind that a seller may take issue with things that are uncovered during the inspection.
You may become frustrated that the seller isn’t making enough repairs or providing you with credit to make repairs on things that you believe need to be fixed. Remain open to improvisations such as eventually adding a bedroom in a refinished basement or turning an office into a bedroom.
Negotiating the price is often the most stressful part of the buying process and the seller may haggle over price. They may also just plain change their mind mid-process regarding selling, and this can be a difficult curveball. Therefore, expecting a few bumps in the road will help keep you from feeling disappointment. Fortunately, your agent has experience with a multitude of contingencies and will be there to help guide you through the process.
As the reality of buying the house draws closer, it’s normal to begin to question whether this is the right house with the right entities that you were looking for. At the last minute, you may question many different things including if it’s too much of a fixer-upper, too long of a commute to work, on too noisy of a street, or is priced right for market conditions. If you do experience some apprehension yet have done all your homework, try to remember why you had your heart set on the house.
TIP: When possible, during the homebuying process, try doing some relaxation techniques including meditation and breathing exercises.
Things to Keep in Mind as You Buy Your Home
Your Monthly Mortgage Payment
If you don’t qualify for a USDA or VA loan, you will need to have cash on hand for closing costs of approximately 2% to 5% of the purchase price, depending on which state you live in. As an aside, if your down payment is less than 20% of the purchase price, you will likely incur the extra expense of Private Mortgage Insurance. Having a 20% down payment will save you money over time, however, it’s not a requirement to buy a home.
An effective method of calculating your homebuying budget is called the “28% Rule.” This means that your mortgage should not be more than 28% of your gross income each month, and no more than 36% of your income should be debt.
Once you have purchased your home and unexpected hardships can happen regarding your ability to make a mortgage payment. However, don’t stress because mortgage help is available to you. For example, Newrez offers several payment assistance options such as refinancing, loan modification, loss mitigation options, and more.
TIP: You may want to spend a little less on your home than you can afford if you’re buying a home that needs some remodeling.
Your Debt to Income Ratio
While you’re saving for your down payment, avoid charging big purchases as this will increase your debt-to-income ratio (DTI) and credit-in-use. If your DTI ratio is higher than 50% you might need to pay down some debt before you buy a home. Therefore, avoid applying for new credit and don’t miss any credit card or loan payments as those will also be considered major negatives. This is because your credit score is likely to be checked again during the time between application and closing. Carrying too much debt can make it more difficult to qualify for a mortgage, as well as make it more difficult for you to save money.
TIP: Carrying less debt will be advantageous during the home-buying process.
Your Credit Score
Not only will you need to have some money saved to put down on a house, but lenders will also look at your level of debt in determining whether to approve you for a loan. Therefore, while you save some money for a down payment, you will also need to maintain a good credit score. Carrying too much debt can make it more difficult to qualify for a mortgage, as well as make it more difficult for you to save money. Improving your credit score is yet another way to “play your cards right” when you come to the home-buying table.
Your Savings
In addition to the down payment, there are also closing costs, property taxes, and ongoing repairs and maintenance costs to save up for. It’s a good idea to calculate your monthly expenses and begin scrutinizing where you’re spending your money and then look for areas where you can cut back. Endeavor to cut out unnecessary expenditures on entertainment, takeout food, and online ordering and put that extra money into the savings for your house.
TIP: Making small changes with your spending habits will help reduce potential stress caused by money worries.
Home Search Tools
Newrez has partnered with XOME to provide you with an intuitive home search tool. Here you can narrow your search for properties and create new listing alerts. You will get neighborhood, school, and market trend information, as well as sign-up for alerts and be notified when property or market conditions change. Just decide what your ideal home needs to have and strategically narrow your search.
You’ll get to explore potential options and use your imagination within different spaces as you consider the pros and cons of different possibilities.
TIP: This tool will come in handy during the most exciting part of buying a home.
Remind Yourself of the Benefits of Buying and Owning a House
When you make a mortgage payment, you’re building equity and are one step closer to pay off. And in many places across the country, it’s cheaper to buy. Use our rent vs. buy calculator to see which could be right for you.
Buying a house will give you an appreciating investment, a more stable housing cost, a source of ready cash, and the freedom to personalize a warm and peaceful space of your own. Rather than spending your hard earned money on rent every month, owning a home will be an investment in yourself and your future. Real estate assets are among the most valuable to own, as the value will generally increase.
Get Pre-Approved
Finding the right home can take a little time so remember that “patience is a virtue.” A great way to start is by getting a preapproval from your mortgage lender and setting a budget. If you’re house-hunting in a competitive market or have a particular home in mind, a pre-approval can provide you leverage and put you at a competitive advantage.
TIP: When you have a pre-approval letter, a seller will know you’re working with a lender who has confirmed that you’re a serious buyer that can afford their home.
Remaining mindful is a good way to handle the inevitable stress of purchasing a house. Try your best to keep emotions out of doing business and stay focused on your end goal. Remember, the right house is the one that’s right for you, and as the old saying goes “you’ll know it when you see it.”
Life’s greatest moments have always come with challenges so it’s important to maintain a positive mindset.
As Sting would surely agree, keeping your cool and playing your cards right will help you all along the way during your journey to your dream home.
