CHAPTER 5 Common First-Time Mistakes
If you decide that investing in homeownership makes sense for you - Congratulations! House hunting is an exciting journey. It's also exhausting and sometimes anxiety-inducing - and for good reason. Unfortunately many people make mistakes along the way that can delay of even derail their dream of owning a home. Use these tips to avoid costly missteps and get one step closer to seeing that "Sold" sign in your future.
NOT KNOWING YOUR BUDGET
Not knowing what you can afford is the wrong way to go into home buying. Even if you can get a mortgage on a place you really should not afford, you will be “house poor” and/or live in great debt for a long time to come. We learned from the subprime mortgage fiasco that what the bank says you can afford and what you know you can comfortably pay are not necessarily the same. You might be able to eke out the monthly payment on that four bedroom on the corner lot, but can you afford to furnish it, maintain the cost of utilities? Perhaps the cute little three bedroom with the single car garage is more appropriate. Ensure you have a complete and accurate budget. List all your monthly expenses — excluding rent, but including vehicle costs, student loan payments, credit card payments, groceries, health insurance, retirement savings, general savings, recreation (e.g., the gym), fees, and so on. Be comprehensive and do not overlook major expenses that only occur once a year, like insurance premiums paid annually or annual vacations, or minor ones that come up more frequently and quietly pile up in the background.
30
Powered by FlippingBook