Why is buying a house so emotional?

Buying a house is stressful and emotional. For most Americans, it’s the biggest financial decision they’ll ever make. If you’re feeling stressed, nervous, or excited, you’re not alone. In fact, you’ll likely feel all those emotions and more at different stages of the home buying process.

One key to buying the right home is managing your emotions. If you let stress get the better of you, you might back out of a great deal. If you get overexcited, you might pull the trigger on a bad one. Learning how to handle the highs and lows of home buying will help you make the best decision for you and protect your best interests.

Emotions behind why you want to buy

Why is buying a house so stressful? How you feel when you buy a home often depends on why you’re buying in the first place. For example, it might be out of:

• Frustration over renting when you could be building equity.
• Excitement over buying a budget-friendly home as an investment.
• Frustration over not having enough space for a growing family.
• Excitement about relocating for a new job and being ready to settle down.

Whatever your motivation, think carefully about when, where, how, and what home to buy, as these factors can significantly affect the trajectory of your financial and personal life.

Importance of knowing whether you’re ready

Start by determining whether you’re ready to buy a home. Otherwise, you may let your emotions get the best of you and rush into a purchase without fully considering the cost and commitment involved. For example, does buying a house fit your lifestyle, budget, and long-term goals? And what’s the status of your credit, savings, and debt?

Personal considerations

Here’s how to ensure that buying a home makes sense for your personal situation:

Commitment

Most buyers finance their home with a 15- or 30-year mortgage, so it’s important to consider how long you plan to own the home. If you’re weighing whether to rent vs. buy and you don’t plan to stay long, renting could be a better option.

You also should weigh the home’s proximity to work, schools, and amenities. While it can be easy to justify living with a long commute, subpar schools, or limited amenities in the short term, these drawbacks can get old fast. Be realistic about what you’re committing to.

Lifestyle

Owning a home is about more than just a place to live. It also means taking on responsibilities like maintenance, repairs, renovations, property taxes, and homeowners insurance. Depending on how much you choose to outsource, these duties can require a lot of time, money, or both. Before you buy, ask yourself if you’re ready for the lifestyle commitment.

Financial stability

Taking on a monthly mortgage payment is a big move and a significant financial commitment. For most Americans, it’s their top expense. Consequently, it’s natural to feel anxious or nervous about buying a home, especially if you’re struggling financially. If that’s the case, don’t be afraid to delay home buying until your finances improve.

Financial considerations

Before you can get a mortgage to buy a home, you must meet the financial criteria. Here are some key metrics to pay attention to:

Credit score

Your credit score tells lenders how reliable you are at paying back debt. Many lenders require a minimum credit score to qualify for a mortgage. At Rocket Mortgage®, for example, it’s 620 for conventional loans and 580 for FHA or VA loans. However, minimum credit score requirements vary by lender, loan program, and other factors.

If your credit score is low, improving it can be a challenging but rewarding experience that will leave you feeling more empowered to make smart financial decisions.

Down payment

A down payment shows lenders you have skin in the game. The more you put down, the less likely you are to default on the loan and forfeit your investment. This gives lenders more confidence that you’ll repay the debt, and they’ll usually reward you with a lower interest rate. Plus, if you put down at least 20%, you can avoid paying private mortgage insurance.

Down payment requirements vary by lender and loan program. For instance, conventional mortgages usually require a down payment of at least 3%, while government loans like the VA and USDA loans require no down payment, and FHA loans require at least 3.5%.

If you can’t come up with enough for a down payment, saving for one may take time. Speed up the process by finding ways to cut unnecessary expenses and boost your income. You might be surprised by how much you can save when you’re motivated.

Debt-to-income ratio

Lenders also look at your debt-to-income ratio, which measures the share of your income that goes toward debt payments. To calculate your DTI ratio, divide your total monthly debt payments by your gross monthly income, then multiply the result by 100 to get a percentage.

For example, if you pay $2,000 per month in debt and earn $6,000 in gross income, your DTI is 33%.

Most lenders prefer a DTI ratio of no more than 36%, though you may qualify for a mortgage with a DTI ratio of up to 50% if you can offset it with a larger down payment or credit score. If your DTI ratio is on the higher side, you can reduce it by paying down debts, earning more money, or both. While this can feel like a frustrating obstacle, it’s well worth the effort if it means getting into your dream home.

How to manage emotions during the buying process

During the home buying process, you’re bound to experience a range of emotions. Here’s what to expect at each stage:

Ensure your financial readiness

Having a lender review your finances can feel intrusive and uncomfortable. For example, you might feel embarrassed about how much money you make or how you spend it. However, lenders aren’t judging your personal life. They just want to ensure you can afford a mortgage.

To prepare for mortgage preapproval, review your finances and have the required documents ready for your lender. These typically include:

• Employment history. Lenders want to see a stable and consistent work history, since it suggests you’ll be capable of keeping up with payments.
• Credit history. Your credit report shows how reliably you’ve handled debt in the past, which helps lenders predict how you’ll handle a mortgage.
• Income. A regular and sufficient income, as demonstrated through tax returns or pay stubs, reassures lenders that you can afford monthly payments.
• Investments and bank statements. These documents show lenders your savings, assets, and cash flow, which help demonstrate your financial security.

Wait for mortgage preapproval

Once you’ve applied for mortgage preapproval, you must wait for an answer. In some cases, approval is instant. In others, the lender may need additional information, which can take more time. The wait can be nerve-racking, but rest assured, you’ll get an answer.

When the decision comes, you may be relieved if you’re approved for the amount you hoped for. However, if you’re approved for less or denied altogether, don’t be discouraged. This just means there’s room to strengthen your finances, and you can always reapply once you’ve made improvements.

Keep in mind that most preapprovals are valid for 60 – 90 days, giving you time to shop for a home with confidence and an edge over buyers who haven’t been approved for financing yet.

Search for a home

With your preapproval letter in hand, you’re ready to start your home search. This can be exciting but overwhelming.

To narrow your options, set a budget and create a list of must-have, nice-to-have, unnecessary, and unwanted home features. Then share this information with an experienced real estate agent who can find and show you homes that meet your criteria.

Keep an open mind. A property you initially overlook might grow on you. For example, with the right budget and vision, a home in need of major renovations and repairs could be fixed.

Make an offer

Making a home offer can be exciting. However, dealing with counteroffers, bidding wars, or rejections can be overwhelming. That’s why it’s best to let your agent do most of the heavy lifting. They can advise you on what price to offer, what contingencies to include, how to negotiate the best deal, and when to walk away.

After all, it’s easy to overbid out of excitement or walk away from a deal because it’s too much stress. An experienced real estate professional who isn’t emotionally attached to the home can offer a valuable second opinion to help you avoid a decision you’ll later regret.

Handle the waiting period

Between offer acceptance and closing, there are still a few more steps in the home buying process, though they’re mostly out of your hands. Stay in touch with your lender and agent throughout the process.

Home appraisal

A home appraisal is a professional assessment of a property’s value. It ensures the home you’re buying is valuable enough to justify the mortgage amount, since the property serves as collateral for the loan.

If the appraisal comes in lower than expected, don’t panic. This simply means the lender won’t finance the full purchase price. You may be able to renegotiate the price with the seller or cover the gap between the loan amount and the agreed-upon price with additional cash.

Home inspection

A home inspection is a professional examination of the property’s condition, including its structure and systems. It helps uncover potential issues before you finalize the deal.

If problems emerge, this can be disappointing, but at least you’ll know what you’re up against so you can make a more informed decision. For example, you could ask the seller to fix the issues, renegotiate the purchase price, or walk away.

Underwriting

Underwriting refers to the lender’s final review of your finances before officially approving the loan. If nothing has changed since preapproval, this should be relatively quick. However, there’s a chance you may need to provide extra paperwork or verify information. Again, don’t be discouraged. Just work with your lender to provide what’s needed and keep the process moving.

Close on your home

At the closing table, you’ll pay your down payment and closing costs, the lender will fund your loan, and the seller will sign the property deed over to you. Congratulations! You’re officially a homeowner. This moment is bound to be full of relief, excitement, and pride. If you have any questions regarding the closing process, consult your agent and lender.

Bottom line: Managing the emotions of buying a home is worth it

Buying a home is an emotional journey. From deciding why you want to buy a home to negotiating offers, you’ll feel everything from excited to overwhelmed. These emotions are a normal part of the process and acknowledging them can help you manage them effectively.

By taking the time to plan and prepare for your home purchase, you can make the experience more enjoyable and rewarding. If you’re ready to take the next step, apply for a mortgage today and begin to turn your homeownership dreams into reality.