Buying a Home: Avoid These 3 Mistakes

Life is full of "should haves" and "if onlys."

But when buying a house, you can leave these thoughts behind by knowing what to do before you purchase and avoiding common mistakes.

Are You a Home-Buying Newbie? Avoid These 3 Mistakes

Recently, I shared with you some of the lessons I learned from buying my first house in Moorhead, Minnesota, and today, I thought I'd pass along a few pitfalls to avoid to help you approach your home-buying journey confidently.

1. Not Knowing How Much Money You Can Spend

One of my biggest regrets when purchasing my first home was not buying more house and relying on my lender to decide how much house I could afford.

In other cases, lenders can approve you for far more than you actually want to spend, so you must make this decision knowing yourself and your budget.

Before taking on mortgage payments, know your budget inside and out to give you a firm grasp on your finances. Don't forget to consider all the "extras" above and beyond the purchase price, such as your down payment, closing costs, furnishings, repairs, and other unforeseen needs.

2. Not Tracking Your Expenses Beforehand

Home buyers who start making home offers without understanding their spending patterns, debts, assets, and income can quickly realize that they're in over their heads.

Instead, track your expenses before you start making offers so you know what you're up against. Be sure you know the answer to simple questions, such as:

• How much do you make after taxes, and how much is left over?
• How much are your monthly expenditures for groceries, gas and car payments, insurance, loans, and other debts?
• Where is your line in the sand? You need to know the internal number that brings you peace. If you're spending over the desired amount and it costs you your peace, then it's too expensive.

Rachel Cruze of Ramsey Solutions says, "to calculate how much house you can afford, use the 25% rule: Never spend more than 25% of your monthly take-home pay (after tax) on monthly mortgage payments. Following this rule keeps you safe from buying too much house and ending up house poor. I want your home to be a blessing, not a curse."

3. Not Leaving Room for Competitive Offers

In today's hot housing marketing, you should count on other buyers being interested in every property you consider, so look for listings that leave room for competitive offers.

After figuring out the price you can afford, lower it a little and start looking. You may be tempted to skirt the very top of your price range, but you must remember that other potential buyers may have more flexible budgets.

Even if most houses sell over the listing price, remember that you don't necessarily have to offer and pay more. An excellent real estate agent will help you look for ways to stay competitive, such as adding escalation clauses to the contracts you submit, which would mean the price only gets raised if other people have higher offers too.

When you're ready to start this life-changing adventure, surround yourself with the experienced, trustworthy experts at Christians Home Crew that will help you move in the right direction.

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