is not knowing what they can realistically a ff ord, both when it comes to the price of the home itself, as well as all other costs, such as down payment, monthly mortgage, closing costs, property tax, maintenance, etc. Not knowing what you can a ff ord is the wrong way to go when buying a home. Even if a bank pre-approves you for a loan you know in your gut isn’t a ff ordable in the long run doesn’t mean you should accept it. What the bank claims you can a ff ord and what you know you can a ff ord — or are at least comfortable paying — aren’t necessarily the same. You don’t want to end up in a situation in a lot of debt and “house poor.” What’s the solution? Don’t rely on the bank. Ensure you have an accurate budget. List all your monthly expenses, being as comprehensive as possible. Consider all biweekly, monthly, seasonal, and annual expenses. Don’t include your current mortgage (or rent, if you’re a fir st-time home buyer). Subtract your total expenses from your net pay, and you’ll know about how much you can realistically a ff ord. You should also use an online mortgage calculator to help you as well as to research current interest rates. Knowing your budget is essential before you begin the home- search process, but buyers ignorant of this, or making assumptions, could end up in a situation that they’ll regret. Don’t let this be you. Mistake #2: Disregarding Hidden Costs A lot of home buyers disregard, or are ignorant of, hidden costs in purchasing a home. Both fir st-time buyers and more “seasoned” home buyers can make this costly mistake. If you don’t prepare for hidden fees, you might be in for a surprise. Closing costs are a good example, as they usually include several fees that cover fin al housekeeping matters, but many buyers don’t factor in this 59
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