There’s no doubt that buying your first home, especially in this economy, is a major milestone, a very rewarding one. But this is something that has a lot of financial complexities to it. Even if you hire a real estate agent for you, it’s still going to be pretty challenging to navigate all of this, too. There needs to be a lot of financial planning put into this because there’s always a chance that you might actually be financially ruining yourself if you make the wrong decision. So, here’s how you can avoid financial pitfalls when buying your first-ever home.
You Need to Have a Realistic Budget
With the idea of looking into houses, browsing online for home decor, conveyancing solicitors, real estate firms, you name it, you’re first going to need to be upfront with yourself on what type of budget you can realistically have. So, what sort of financial situation are you currently in? It’s best to consider not only the purchase price but also additional costs like closing fees, property taxes, insurance, and potential maintenance expenses.
Seriously, a lot of money goes into this; you have no choice but to pay for a lot of third parties, too, and there’s no way around it either. So, just be sure to keep all of this in mind.
Take Time to Save
When you’re saving up, you’re going to want this to be healthy; you don’t want to just barely get by or skip meals in order to save up for something like this. While there are loan programs that accept smaller down payments, saving for a substantial down payment is advantageous for this situation because the mortgage payments tend to be small. So, just give yourself time to save up, not just for a down payment, but all the third-party services, the furniture, the move, the inspection, and so on. It’s going to be really expensive in the long run.
What Might Be the Total Cost of Ownership?
Just because you can afford an ugly fixer-upper doesn’t mean that you should get it. The same thing goes for a large house; just because you can afford it doesn’t mean you should get it. You just want to keep in mind that beyond the mortgage, you’re going to have to factor in all costs associated with homeownership.
This includes property taxes, homeowner’s association fees, utilities, and maintenance expenses- and the list could continue. Every house is going to be different; even if the cost of the sale of the house is the same, the upkeep, taxes, fees, and bills could still heavily vary.
You Still Need an Emergency Fund
Whatever you do, do not take out money from your retirement fund or even your emergency fund either. There’s always going to be unexpected costs that will rear its head, so do you really want to deal with that? You’re definitely going to need a financial cushion because you never know when home repairs, appliance replacements, or sudden maintenance needs can arise. Even these can cause you to get into financial ruin, so make sure your emergency fund is strong.
