If you come home from the store with an expensive bag, try it on with a few outfits, and decide that it’s not for you a couple of days later, it’s no big deal. You just take it back, right? But you can’t do that with a home purchase. Once you sign the closing papers, that home is yours, for better or worse. Reduce the anxiety of buying a home you hate with this home-buying plan.
Set a Budget
Some people rely on the lender to tell them what they can afford—even if it’s more than what they think they can—but this is a mistake. You’re the one who knows your monthly budget best, and you know what kind of mortgage payment is right for you. So before you head to the lender for pre-approval, have an idea of what you’re comfortable spending each month, and then stick to it.
Remember to set a budget based on your current income. Don’t decide what you can afford based on an anticipated raise or a job switch. If anticipated income increases don’t materialize, you may be left with payments you can’t make. No one wants to have to decide which bills to pay and which ones to let fall delinquent.
If you haven’t owned a home before, don’t forget to budget for things like property taxes, home insurance, and maintenance. If you’re moving to a bigger house, you’ll also need to budget more for utilities.
Make a List of Must-Haves
Once you have a set budget, come up with a list of things that you absolutely must have. If you’re buying a home with someone else, have that person do the same thing. When that’s done, you can come together and make a mutual list of non-negotiables. This list will keep you from buying a home that doesn’t have something really important to you or your purchasing partner. This will also help minimize disagreements on what’s important and what’s not in any particular house.
If you have to have a third bedroom, don’t let that cute bungalow convince you that two will be fine. If you have to have a backyard, don’t be swayed by the gorgeous loft downtown. In the end, you’ll be far happier if you stick to your list of must-haves. Don’t settle for something that’s almost what you wanted.
And don’t forget that must-haves include location. Do you want to be in a specific school district? Think about a home’s proximity to railroad tracks, busy roads, parks, and schools. And think about other homes around the neighborhood. Don’t buy a home in a neighborhood that’s steadily declining.
Make a List of Wants
Know yourself and your lifestyle well enough to distinguish your wants from your needs. Again, this is something both you and anyone buying a house with you should do. You may want an updated kitchen with stainless steel appliances and granite countertops, but this probably isn’t a need. Nor is a fully fenced yard.
These are both upgrades you could make yourself, either right after you purchase the home or somewhere down the line. Don’t give up on a great house if you can (and actually will) make some changes to it yourself.
Keep Your Timeframe Open
If at all possible, don’t buy a home in a big rush. You might find your dream home after looking at one or two properties, but you also might not. You don’t want to be in the position of having to settle for something because you need to buy something ASAP. Don’t settle for a home that “kind of” works for you. This is a surefire way to regret your home purchase.
You also want to have the luxury of looking at a home multiple times, if possible. It’s particularly important to view a home privately, which gives you a less-pressured environment to see how the home might work for your family. It can also be good to review a floor plan and pictures of the home, since you might think of things that you didn’t think of when you were touring the home.
Don’t Get Caught Up in a Bidding War
If you’re in a competitive market, you may make an offer on a home that has other interested parties. You might get caught up in this situation and just want to win, no matter the cost. If this happens, step back and ask yourself how much you really want the home. Don’t pay more than you can afford just because you want to beat another buyer.
Before You Sign
Before you sign, run through these questions:
- Have you compromised on something that you don’t feel great about?
- Can you afford this payment now and in 12 months?
- Does this home meet all your must-haves?
- Are all purchasers 100% on board?
If you can answer a resounding yes to these questions, go ahead and sign those papers! Although some things always come up after a home purchase, a solid home-buying plan gives you the very best chance possible of buying a home that you will enjoy for years to come.
Thank you for the lovely complete information that will be helpful to so many! Hope you are doing well!!
Thanks for your comment, Tom!
Good info. Easy to understand and pass on to Buyers. Thank you.