Buying a house doesn’t have to break the bank if you’re smart about it. By carefully planning and considering all your options, you can avoid overspending and secure a home that fits your needs and budget. Ultimately, these tips can lead to long-term financial stability and satisfaction with your purchase.
1. Decide What You Want
Make your choices. List your needs and wants, negotiables and non-negotiables, when it comes to buying a house. Then, don’t waste a minute looking at anything else. And don’t budge! This list of wants and needs might include “less than a 25-minute drive to work” or “3 bedrooms or more.” You know what you and your family need the most.
2. Shop Neighborhoods From Your Couch
An online map lets you learn a lot about a home or neighborhood. Have the little Google man walk around for you so that you don’t waste time and fuel driving around towns. This way, you’ll know ahead of time if there’s something like a busy intersection around the corner, a power plant two doors away, or even something good like a bakery two doors down.
3. Scour Listing Photos
You can learn a great deal about a home by stealthily inspecting its listing photos. Look for things like dated electric outlets, heating sources, mold, potential repairs; the list goes on. When buying our foreclosure home, we knew before we saw it in person that it would need work.
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4. Consolidate Your Home Shopping Days
Particularly if you live far away from your new home’s destination, you can save money by shopping for houses in clusters. Take a full day or weekend to view neighborhoods and homes in bulk.
5. Drive Around a Prospective Neighborhood
Once you are ready to consolidate your shopping days, schedule a “drive-by” day without a realtor. Make a list of houses you want to see, then drive by all of them. You can probably cut your list down very quickly. You may not have initially noticed something geographically undesirable, like a train station next door or a sewage plant across the street.
6. Organize Your Money
Get your financial ducks in a row. A better credit score means a better mortgage rate. A higher down payment means a smaller mortgage. Furthermore, with an airtight financial presentation, you’ll get preapproved for a loan faster – and time is money when bidding on a house!
7. Explore All Possible Costs
If the principal, interest, taxes, and insurance (PITI) look like they will be less than your monthly rent, buying a home is tempting. But have you considered property taxes, HOAs, and utilities? What about the costs of trash and recycling pickup, if applicable?
8. Understand PMI
PMI is private mortgage insurance. If you make a down payment of less than 20%, you’ll have the cost of PMI on top of your mortgage, interest, and taxes. It’s not cute! Avoid it if you can!
9. Educate Yourself
Start with your local library and read up on investing strategies that will work for you. Follow the investors you admire on social media. Use your best judgment to decide what philosophies you want to adapt and which you want to ditch.
10. Use an Experienced Agent
Now is not the time for an agent’s first real estate deal. An experienced agent should guide you through the home-buying process more efficiently. Get recommendations from family, friends, and coworkers.
11. Pay For Quality, Once
Skipping things like a title search or home inspection might seem like they’re saving you money upfront. But if you miss a huge problem, you’ll pay exponentially more for it down the road, so don’t skimp on them.
12. Remember a Contingency
If you’re buying a home that needs work, carefully estimate your repair costs and create a home renovation budget. There’s nothing wrong with a foreclosure or fixer-upper – in fact, we tackled a two-for-one in that regard. It was financially a great decision, but know that we were very intentional when bidding and renovating.
13. Cash Is King
Have cash at the ready in a high-yield savings account. Cash always helps. Typically, buyers use bank financing. But, if you make a cash offer, your offer looks more attractive because there are no financing contingencies.
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