Do You Have Buyer's Paralysis?

You've looked at dozens of homes. Your REALTOR® is about to tear his/her hair out with frustration. You are paralyzed, letting one great home after another pass you by. Why can't you make a decision?

Buying a home can be an overwhelming process. There are so many decisions to make and any of them can mean serious financial consequences. A home, after all, is hardly a liquid asset. Nor is it a growth investment, according to Wall Street definitions. In fact, it's your greatest financial debt, requiring constant maintenance. With all that weighing on you, no wonder you've got commitmentphobia.

Yet, you really want to buy a home. You know that few purchases will provide you the quality of life that a home of your own does. And, there are plenty of advantages, as well - tax breaks, rising real estate values, a stable environment for the family, to name only a few. So you stifle your worries and keep looking for homes. But still, you just can't find the one that's just right for you.

Conflict is the root of indecision, and nothing conflicts the mind faster than money. The question is, which aspect of money is stopping you from moving forward?

Fear of Spending Too Much. Lenders will loan you money at the top of your ability to borrow. Some will suggest that you will be happier in a "bigger, better" home, eliminating the need to "trade up" in a few years. Stretching to buy the most home you can possibly afford is a good strategy, but only under certain conditions - that you have confidence that your salary will rise, that your income is stable, and that you can handle large surprise expenses.

If you've been pre-qualified, you are already looking at bigger, better, more beautiful homes at the top of your range. But if you have the feeling something isn't quite right, it may be because you don't have enough reserves in case something should happen. Those are your instincts talking, and you should listen, because your desires have been doing the talking up to now. Your instincts are telling your desires to scale back a little.

Talk to your Realtor and ask her to show you less expensive homes. You can't go wrong buying slightly under your ability. In fact, many financial advisors tell their clients to budget about 25% of their income for housing in order to position them to build reserves for savings, investments, home improvements, emergencies and dozens of other reasons. That's almost six percent less than lenders borrowing guidelines, but just think what else you can do with six percent of your income.

A Conflict in Goals. Many couples purchase homes with the idea that they will have a child, so stretching buying power to have the extra space makes sense. But if you are trying to accomplish two big financial goals at the same time - buying a home and adding to your family, then something has to give.

You can't have it all - peace of mind, a large mortgage, and burgeoning expenses all at the same time. Simply prioritize your goals. What is most important to you? Whether you are planning a family, returning to graduate school, paying off a student loan, or buying a new car, you surely realize that your financial pie can only be sliced so many ways.

Work to improve your cash flow. Accelerate your credit card pay -offs Don't incur new debt. Rebudget your expenses and eliminate unnecessary expenditures. Make compromises - vow to cut down if you can't cut something out. Be willing to move timelines for meeting your goals. Don't be influenced by others to live beyond your means. Set your sights on an affordable home, and you may find your dream home will appear right before your very eyes.

Problems in the Marriage. This is one of the toughest issues to address, and one your Realtor can't help you with. But just as you are listening to your instincts about the amount of money you should spend on your new home, you should be paying even more attention to your feelings about your marriage. And only you can answer the question - will we still be together in five years? You should at least be able to predict being together long enough to pay off the interest on your loan! Or you'll be selling your home without the benefit of building any equity. Equity only comes with appreciation and mortgage reduction.

Buying a home will not fix a poor relationship. It will only make things worse. So you have a decision to make and it isn't which house to buy. It is whether or not you want this relationship to survive. If you decide you want the marriage, then you must pour your efforts into fixing its problems, including your share of the blame. Be willing to change some things, compromise on others, or accept many things as they are. If you can't do all of those, then dissolve the partnership is your only other choice. After you have solved the problems in your relationship, you will find your home more easily.

Fear of the Future. Fear takes the fun out of a lot of things. Reasonable fears you can handle on your own with a little common sense. A good way to tame fear is looking at the worst case scenarios compared to the best case scenarios.

What if we can't make our payments? This question can be balanced by a best case. What if we manage our money so well that we can make double payments? So the fear here is manageable - it comes down to how confident you are about managing your money. If you aren't sure of yourself, get help. Ask someone whose money management style you admire for advice on how to manage your money better. Then stick with it.

What if the value of our home goes down in value? What if your home goes up in value? Property can go up or down, but you can assure that your property will always remain desirable by maintaining it. Have enough budgeted in your reserves to perform scheduled and unscheduled maintenance. Look at the properties surrounding the home you are considering. Are they maintained with pride? Are they being updated? Then your chances are good that the neighborhood and your home will retain its value. Rest assured that there will always be a buyer for an attractive, well-maintained property.