Home-Crashers: How to make smart money decision buying first house 12/5/16 by Carmine Barbetta (FB)
Remember buying your first house? Or maybe you’re someone considering that purchase for the very first time.
No matter if you’ve been through it or are about to embark on it, you can do plenty to either avoid the same first time home buying pratfalls or shy away from all the war stories you’ve heard about buying a home.
The biggest misstep most home buyers make is they tend to get romanced by the initial screening process where they get a dollar amount they’re pre-approved for and let that be their barometer as far as what they spend.
That amount, which looks good on paper, can be applauded privately but you need to take a look at your budget and make sure you can afford that larger monthly payment, along with any home owners insurance or taxes rolled into that amount.
What most tend to do is over purchase and buy far beyond their actual means.
Just because you’re approve for a $200,000 home doesn’t mean you have to spend every cent of it. The real discussion has to center around what you can afford, not what you are allowed to spend based on a determination from a lender.
Some home buyers purchase based on emotion or that wow factor that tends to do most of us in when it comes to buying anything from a cell phone to a computer, car or house. As much as you love that swimming pool, did you consider the utility bill involved with that heater? As much as you love the idea that you’ll have plenty of acreage, what about the maintenance, landscaping and lawn care involved with it? The fact remains that the house might catch your eye at first, but the money spent has to be the primary thought that races through your mind. If the words, “we can’t afford this” is muttered just once, walk away safely.
Another major element of a home purchase is the down payment and as much as you don’t want to spend a whole lot on it, you have to consider the 30 year mortgage plan and being able to save on interest (even thought the numbers are low percentage wise) but also being able to save on the monthly payments as well. A higher down payment allows you to spend less every month for the next three decades or less.
Owning your own home is so important to all of us, but not at the expense of putting your finances in less than enviable status. You have to remember that as much as the perfect house is in your mind, you’ll quickly deem your money status anything but.