Are you in the process of buying your first home? Many people approach the decision like Jon White. He winged it. Winging it ended up costing him thousands of dollars in fees and unexpected expenses that could have been avoided.
Thankfully, his second home buying experience was an example in lessons learned.
When buying your first home, everyone has an opinion. While the process is not rocket science, there are still tried and true steps to take to ensure you save money, end up pursuing the American dream, and minimize the risk of horror stories that make house buying a overwhelming prospect.
Jon has written about his experience buying his first home the wrong way. A Tale of Two Houses is a comprehensive guide that covers many of the common and not so common elements home buyers should know.
Control Your Economy?
Taking an active role when buying your first home may seem easy enough. But what does an active role include?
Like Jon, we expect that the professionals know their stuff. We can abdicate the most consequential decisions to other who don’t know our economy.
Before taking any steps toward buying a home, Jon suggested that we control our own economy. That means, set a realistic picture for what you can afford. Comparing your rent to a monthly mortgage just won’t do.
Keep in mind that owning a home means:
- You are responsible for all maintenance. Appliances break down. Systems need replacing. Damage happens.
- Taxes, insurance, and in some cases assessments need to be included in your cost estimates.
- Exterior maintenance and the related costs are now all up to you.
These are not meant to scare you. They aren’t scary at all. These are just predictable eventualities that aren’t so exciting when we start thinking about buying your first home.
Avoid House Fever
Catching a highly contagious case of house fever is a great way to cloud your judgement when buying your first home.
Never heard of it before?
House fever happens when you start to see yourself living in a house before you’ve even run the numbers. You imagine how your furniture will look in the new place. Heck, you even start buying new pieces in your mind because your current set just won’t do.
Before one calculation has been run to determine whether the house will work for your budget, you’ve fallen in love. There are plans for baby room decorations in motion. You’ve figured out how many guests a backyard barbecue will accommodate. You’ve even scoped out the best places to pose any future children with their prom dates.
You are bought, sold, and paid for.
It’s hard to come back from house fever. The problem with falling for a house that doesn’t fit your ability to pay is that you may make unrealistic decisions in order to make it fit. After moving in, dealing with the financial tensions of a house you can ill-afford will turn that dream home into a nightmare.
We don’t want that.
Avoid house fever by:
- Determine what you can realistically spend before you contact a realtor.
- Only view properties up to a range that you set, not the range set by a realtor or mortgage broker.
- Draw up a list of must haves before searching and make sure each out matches your needs.
Topics Discussed in this Episode
Jon White was gracious enough to discuss these items and more in this episode of the Midday Money Show. He shares how to determine your price range, how to find the best realtor, and one thing that saved him from losing and additional $10,000 on the sale of his home.
Control your own economy. ~Jon White