That’s our house in the feature photo! And these are our tips for buying a house!
First a disclosure – I’m not a realtor or banker. I’m a homeowner. And I’m in the beginning stages of learning about real estate investing.
But by following these tips for buying a house, especially for first-time home buyers, we found our dream home and we’ve been able to keep our house even during the worst of a bad economy, and even after I lost my job due to a disability.
Tip #1: Don’t Rush Into Buying a House!
Take your time! If you’re renting and you’re not being forced to move, make a list of what you must have and what is most important for your first house.
This should include how many bedrooms and bathrooms you need, how big the rooms need to be, if it has a garage, how much land is necessary, etc.
I was renting a really nice apartment before I moved into my husband’s house, which he was also renting. When we decided it was time to start looking for our first house together, we sat down and made our list.
We weren’t being forced to move. In fact, our landlady didn’t want us to move! But she also wasn’t willing to make some necessary repairs to the rental or reimburse us for the repairs if we decided to make them ourselves.
My husband had been renting the house for almost 10 years and we were ready to move on. But the first thing we decided was we weren’t going to go backwards. With two young children, we needed to buy the same size house with the same size yard and a garage in a good school district, or we’d just stay put a while longer.
No need to rush into something we’d end up not liking later on!
And by taking our time, we found the perfect house to make our new home!
Tip #2: Make a Budget!
This is where a lot of new homeowners go terribly wrong! They get word from the mortgage company that they’re prequalified for X amount of a mortgage, but don’t sit down and figure out if they can even afford it!
There are at least two crucial things you need to figure out in your budget before you even go to a mortgage company to get prequalified.
How much more can you afford to pay on a mortgage over what you’re paying now for rent or your current mortgage?
What kind of a cut in pay would you take if one of you, or both of you lost your job or ended up on disability? Would you still be able to sustain yourself and not lose your house?
Tip #3: Stick to Your Budget!
Here’s what happens sometimes. Couples get all excited that they’re “qualified” for this huge mortgage. So they run out and look for houses in that price range and end up with a lot more house – and mortgage – than they can really afford.
And then they end up working extra just to keep the house and nothing else. It’s sad, actually.
Here’s what we did. Our lender prequalified us for a $300,000 mortgage. And we’re like, what planet is he living on?
We took our time and only looked at houses in the $150,000 and less price range. And it’s a good thing we did too! Four short months after we made settlement, I was out of work, and my husband was already on disability before we bought the house.
So now both of us were out of work! Good thing we didn’t have this huge mortgage on our heads! That was almost 10 years ago and we still have our house! And we made sure to buy a house with an extra “bedroom” since we both work from home to supplement our disability.
Meanwhile, when the economy took a huge downturn, and it still hasn’t recovered, For Sale signs are going up all over the place as couples and families downsize from a house they couldn’t really afford in the first place.
Or they’re walking away from their homes and letting the bank take the properties while they go back to renting or moving in with other family members.
Tip #4: Follow These Tips for Buying a House in ANY Market
The bottom line – don’t ever just go with what the mortgage companies or banks tell you is what you can afford. They’re not using the right numbers anyway. If they prequalify you for a certain amount, cut it in half and look for properties in that price range.
Today’s economy is too uncertain to rely on someone else’s numbers. You need to do your own budgeting, and stick to it!
Follow these tips for buying a house – in any market – and you shouldn’t have to struggle later on.