This is a topic near and dear to my heart right now. In December my boyfriend proposed to me, after the initial shock and immediate wedding planning excitement, we quickly realized we want to purchase a home that we can move in to after the wedding. We don’t want to be the typical newlyweds that overlook the fine print and idiosyncrasies of home buying so I began to do research on mistakes we should avoid. I found such great tips, that I wanted to share and I hope you find them as useful and insightful as we did. Remember, owning a home is an exciting and overwhelming investment, so do your research – be thorough and have fun with the process, enjoy all the milestones!
Okay, let’s get to it:
Mistake Number 1:
You know what they say about when you assume. Just because you feel ready for a home and a mortgage, doesn’t necessarily translate to being able to afford a home – there is a lot more to it. A home mortgage comes with property insurance, taxes, homeowner’s association’s dues in some cases, maintenance, and higher electric and water bills than you would be making in an apartment.
Mistake Number 2:
I’m guilty of this one, and you would think I would know better. I love to take drives with my fiancé and just explore neighborhoods I like – if a home happens to be on sale in the neighborhood I take a flyer. What’s wrong with this picture? Well, according to those who know, home buying doesn’t begin with home searching, that’s actually backwards! I know… I was thrown off by this concept too.
Ideally it begins with a prequalification from a trusted Mortgage Lender. We- you and I- have to remember that buying a home should be a financial decision, not an emotional one, and by going to a lender and getting prequalified first, it separates the two. Click here for a more in depth look and tips for pre-qualifying!
Mistake Number 3:
Living above your means! Sure, the bank has approved you for a $300,000 loan but should you really purchase a home at that value? It would make more sense to give yourself wiggle room in case of an unprecedented circumstance in the future, and I’m including everything from loss of income to having children. Make your budget before you go to a lender; know how much you want to spend on the mortgage payment monthly, that way you know your limits.
Mistake Number 4:
Using up all of your savings on a down payment. Sure the idea of putting 20% down to avoid mortgage insurance sounds lovely, if you can truly afford it. If not, I don’t believe in leaving your savings empty! You never know what can happen in the future for one, and if you’re moving from an apartment to a home, odds are that you are going to need some furniture or a little bit of money to decorate your new home- I’ll refer again to mistake number 3, don’t live above your means. Find what you can afford, and try to be below or slightly below your means, in other words play it safe don’t live on the edge! Plus, there are great programs out there where you don’t need the 20% down! It all goes back to research – research, research, research!
I hope these were valuable pieces of information for you like they were for me. Having knowledge always puts us ahead of the race, so pass this along if you know someone that can benefit from this information!