You really have to know your budget well before you go house hunting. Most first-time homebuyers make this big mistake of overreaching into the financial aspect by not accounting for all costs involved or misjudging the amount of mortgage one could handle.
First, you can get pre-approved for a mortgage. It gives you a more realistic picture of your price bracket. Remember, just because you get pre-approved for a certain amount doesn’t mean you should spend that amount. It’s best to leave yourself some wiggle room in case there are unexpected expenses and also build up reserves for emergencies, repairs, and future upgrades.
Hidden Costs to Consider
The home price is just the beginning. Loads of hidden costs of homeownership may easily catch a first-time buyer off guard: property taxes, homeowners insurance, and closing costs must be factored in.
You need to budget not only for ongoing maintenance and utilities but also for possible renovations or repairs. A general rule of thumb is to budget at least 1 percent of the home’s purchase price per year for maintenance and repairs. That way, you won’t have any financial jolts down the line.
Don’t Make Emotional Decisions
You also want to avoid making emotional decisions when buying a home. Just because it seems perfect, that doesn’t mean that you should spend massive amounts of money on it. There’s always something else available.
If you find yourself on the brink of making an emotional decision, take some time out. Try to figure out whether the additional expense is really worth it, or whether you’d be better off simply downsizing and finding something else.
Don’t Ignore Your Future Needs
You also want to avoid the trap of ignoring your future needs. While a property might seem ideal now, you want something that’s going to provide sufficient space for years to come.
This problem is especially bad when you make decisions based on emotions instead of sound financial principles. You know that you want to get into the property as soon as you can, but you aren’t thinking long-term about what you actually need.
Check Your Financing Options
You should also spend some time considering your financing options. You want something that is going to support you long-term and make sense based on your requirements.
Trying to learn about FHA loan benefits and how to qualify is a good idea. Talking to experts who understand these products can often save you quite a bit of money.
You also want to talk to the mortgage companies about the rules regarding your mortgage rate. Check the interest payments and when they renew. Also, check whether they will adjust downwards over time or if you’re locked into a higher contract.
Get A Home Inspection
Finally, you want to ensure you have a thorough home inspection of any property you intend to buy. Make sure that it has all the mod-cons you want and doesn’t have any glaring problems that could cost you a lot of money in the future.
