It is important, when looking at homes, that you not only look with your heart but your mind. You need to think practically before you decide to buy a home. You don’t want to end up in a home that you can’t afford because you could find yourself in some financial trouble in a few months or years.
However, you shouldn’t give up. You can still find a perfect home that you can afford. Here are some tips for buying a home that you can afford.
Start With a Pre-Approval
Once you decide that you are ready to buy a home, you need to meet with a lender to find out how much you can realistically afford. By looking at your paperwork and checking out your credit scores, they will come up with a number that they are comfortable lending to you for a home.
However, You Are Probably Not Going to Want to Spend That Much
Just because you can be approved for a home that is three hundred thousand dollars doesn’t mean that you should spend that much. Look at the estimated payments to see if there is any way that you could afford it. Most of the time, buyers look for homes below that range so they can live comfortably.
Don’t Forget All of the Other Expenses That Go Into Homeownership
Yes, your mortgage will be your most expensive bill, but it won’t be the only one. You are going to have to pay for electricity, sewer, water, trash, phones, and other things which are all going to add up. If you are buying an older home, you may want to have some extra money in case anything breaks in the near (or far future).
Many first-time homebuyers who haven’t lived on their own yet struggle with all of the bills that they have, on top of their mortgage payment. Even groceries add up quickly, especially if you never bought many before.
Wait Until You Have a Good Down Payment
The more money that you have for your down payment, the better off you will be. You may be able to get a loan without one, but that doesn’t mean that you shouldn’t.
In fact, if you are able to put down twenty percent, you don’t have to pay private mortgage insurance. This extra cost is to protect the mortgage company if you don’t pay your mortgage. Even if you only have to pay an extra one percent, that can quickly add up each month.
Make Sure That You Are Comfortable With the Offer When You Put One In
Many people find a home that they love, and they forget about everything else – including their budget! It is important that you know what you can afford and stick to it. Unfortunately, many people get into bidding wars only to find out that they can no longer afford to buy the house that they said they would. At that point, they may be too far and they have to buy the home anyway!
If you don’t want to be house-poor, you really need to make sure that you find a home that you love at a price that you can afford. Though you should start with a preapproval, it is important that you just use that as a guide. You probably want to buy a home that is much less so you can live comfortably. You are going to want to have some money for your other expenses (and fun) too!
Find More Tips for Buying a Home That You Can Afford
It is even better if you are able to get a good down payment. The more that you can put toward your loan, the better your monthly payments will be. If you are able to put twenty percent down, you won’t have to pay private mortgage insurance, which increases your monthly payment also!