Today, I discuss part two - which is to seek out the real need for the purchase.
A motivation to buy a home on the surface may seem simple but there is often a more complex need buried beneath the motivation. Once you discover the real need for the purchase, you will be able to determine the absolute best finance strategy to pursue.
To determine the real need, go seven questions deep. I learned this trick from a very successful real estate coach about 10 years ago and have since used it for every major decision I face. I cannot stress how well this seven deep formula works if you take the time to do this exercise.
Let's say for example sake that you are a first time home buyer moving from an apartment complex.
Your seven deep question and answer session may look something like this:
- First Question: What is important about buying a home to me? Answer: I am tired of throwing away my rent money every month.
- Second Question: What is important about not throwing away rent to me? Answer: Well, I would really like to have something I can call my own.
- Third Question: What is important about something to call my own? Answer: Well, I would really like to paint it and express my style and it would be really nice to have friends over to show off my investment.
- Fourth Question: What is important about self expression and investment to me? Answer: I want to look like I have achieved something. That I am committed to something. I want to show I am responsible and can handle things on my own.
- Fifth Question: What is important about achievement, commitment and responsibility to me?Answer: Security and stability. I know if I am committing and being responsible that I will find security and stability.
- Sixth Question: What is important about security and stability to me? Answer: When I look to the future, I want to be successful. I want to make wise investments and have a nest egg.
- Seventh Question: What is important about wise investments to me? Answer: My Mom and Dad were always stressed about money. I remember feeling their stress as a child and vowing to never feel that way. I don't want to live stressed out like they did.
I realize that every one has a different answer to their seven questions, but if you will do this exercise, you will always find the real need and commitment towards the seventh answer. In this scenario, the real need is a wise investment and desire for stability, The strategy then becomes finding a good deal with a shorter term mortgage so the home is paid for by retirement age.
Contentment is the side effect of the real need. Once the real need is determined, contentment will follow and the pursuit for the right type of home and mortgage structure will ensue. Oprah Winfrey once said, “Be thankful for what you have; you'll end up having more. If you concentrate on what you don't have, you will never, ever have enough” I can't think of a better description for the word contentment or a better formula to incorporate when looking to buy a home.