Most people have some idea what their dream home would look like. It might be in a city, or in a rural area on lots of land. And it might have amazing features such as a big pool or a luxury kitchen.
While it may be fun to think about your ideal place, in reality, dream homes often turn out to be overrated. And if you try to purchase your “perfect” property, you could come to regret it.
Here’s why dream homes often aren’t all they’re cracked up to be.
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Dream homes can lead to financial problems
Dream homes often lead people to make financial decisions when buying or building that they quickly come to regret.
When you have an ideal of a perfect property and you buy into the concept of a dream home, it’s easy to justify spending much more than you originally intended to get it. After all, who doesn’t want to make dreams come true? When you feel like your dream home is within reach, you might stretch your budget, or end up overbidding for a property, possibly even paying more than its market value.
When you spend too much trying to fulfill a fantasy, your dream home could turn into a nightmare. You’re probably paying off your mortgage over 30 years. If you have to spend three decades struggling to make payments at the upper end of your budget, you could face a lot of financial stress.
For many people, a dream home means large and expensive. That usually leads to higher related costs as well — such as higher utilities and costlier property tax bills. This can compound any financial stress caused by stretching your mortgage payment budget.
And if you overpaid for your dream home and it isn’t all it’s cracked up to be, you could get stuck there, unable to sell for the amount you spent.
Don’t let your dream home turn into a nightmare
While there’s nothing wrong with wanting certain features in your home, problems arise when you use the concept of your “dream home” to justify spending choices. Your choice of a house needs to be, first and foremost, financially rational. Your property is most likely going to be one of your most valuable assets, so aim for a sound investment when you purchase it. That means not taking on a larger loan than you can afford or buying a house with higher ongoing costs than you’re comfortable with to fulfill a fantasy.
Be realistic about what you can afford without compromising other goals, and be willing to settle for a property that may not be perfect, but is good enough. Even if it’s not your dream home, you may end up happier if it’s an easily affordable property with a mortgage payment and monthly costs that give you flexibility in what you spend.
View more information: https://www.fool.com/the-ascent/mortgages/articles/why-dream-homes-are-overrated/