+++++++++++ April 14, 2000 +++++++++++++++++++
Mortgage Rate Update: A Breather?
Recent Site Updates: Housing Needs and Wants Scorecard
This Month’s Tip: Balancing Needs and Wants
Welcome to the April edition of the Home Buyer’s Information Newsletter. We are entering what is traditionally the most active time of the annual housing market, the spring and early summer, which generally means higher inventory levels (more homes from which to choose) as well as higher levels of buyer activity. You may find more competition, but you will also have more choices. Keep in mind that at this time of the year the old adage holds even more true: Good homes priced correctly sell quickly while the overpriced and less desirable homes sit on the market.
Mortgage Rate Update: A Breather?
Mortgage rates showed a tiny bit of softening in early April, with 30 year fixed rates averaging at just about the 8.00% level. This may be a temporary breather, though, with the prospect for interest rates in general–especially short term rates–tending toward the upward movement. Economic figures released on April 13 and 14 indicate that inflationary pressures are still very alive, raising the prospects for the Fed boosting rates when they meet in May.
Additional mortgage information, hints and questions can always be found at on the site.
Recent Site Updates: Housing Needs and Wants Scorecard A number of users have asked for a printable sheet where they can make notations of items that they need in a home and compare how an individual home matches up. You can find it at:
Needs and Wants Scorecard It goes hand-in-hand with this month’s tip,”Balancing Needs and Wants” below.
Lending Tree Mortgages
In this volatile financial and interest rate environment getting as many loan comparisons as possible is crucial. At Lending Tree you can submit one simple application and within a few business days get up to 4 bona-fide offers from lenders competing for your business. Get more information here.
This Month’s Tip: Balancing Needs and Wants Would you like a simple house buying tip that can save you hundreds, thousands or perhaps tens of thousands of dollars? Get a good grip on what you NEED in a home and what you WANT in a home and the DIFFERENCES in needs and wants. Sounds easy and obvious, but many home buyers confuse the two and end up with either the wrong house, spending too much money on the home they buy, or worse, both.
The first step is to understand that there is a clear difference between what you need in a home and what you want–even if the distinction sometimes gets a little hazy. Real Estate Agents can tell many stories about buyers, when asked what they need in a home, who reply with something like “3 bedrooms, 2 full baths, an extra bedroom or an office, a garage, vaulted ceilings in the great room, skylights and a white kitchen.” See the mix of needs (most likely the 3 bedrooms, the 2 baths, the office/bedroom and perhaps the garage) and the wants (the vaulted ceilings, skylights and the white kitchen) in the response? For many of us, there is no distinction- all of the above are perceived to be NEEDS.
“Well,” you may say, “what’s the big deal? What I WANT is as important as what I NEED!” It may appear that way, but it helps to understand the possible consequences of putting too much concentration on the WANTS.
You Can Pay Too Much
The first, and most expensive consequence is that those who pay too much attention to what they want usually tend to pay too much for their homes. There are a few reasons for this. First, those wants– usually amenities–translate into cash. It simply costs more money to build a home with added features and sellers want to recoup their investment. Second, as the number and extent of your wants increase, the number of available home choices decrease, meaning supply and demand come into play. The fewer the choices, the more likely you will pay more. Third, the more “exact” you want a home based on your wants, the longer it usually takes to find it. The downside of that situation is that while you wait to find the perfect home, prices (and often interest rates) continue to rise. You don’t get more home by waiting, you just pay more for it.
The more you “tailor” the home you buy to your own particular wants, the more likely the home will not match a future buyer’s wants (and perhaps even their needs). This is particularly true in custom built homes where buyers will build a home specifically to their own tastes, only to find at resale time that the pool of buyers with the same tastes is very small. Less available buyers usually equates to lower sale prices and longer marketing times.
Today’s WANT May Become Tomorrows “So What?”
Especially in today’s rapidly evolving society, what may seem to be a “must have” can become a “don’t need” in a short amount of time The wonderful outdoor spa that cost an additional $5000 (and nearly $40 a month in added payment!) loses its glow when it goes unused for weeks or months at a time…by buyers who insisted they would use it a great deal.
In summary, those items that are necessary for safe and comfortable living are needs. Examples are the number of bedrooms and baths, location convenient to work and services, a safe neighborhood. Wants are the “extras” that you desire IF they fit easily into your budget, such as gas fireplaces, screened porches, berber carpet, island kitchens. Your life CAN go on without them!
You’ll find additional information on the site regarding analyzing your needs at wants at: Your Needs and Wants
As always, if you have suggestions for improving the site, or topics you would like to see addressed in this newsletter (or, if you have used the Home Buyer’s Information Center to successfully purchase a home), drop us a quick line or access our feedback page.
Have a great April and good luck in your home buying endeavors!
The Team at the Home Buyer’s Information Center