Buying a house is no doubt one of the biggest purchases you will make in your life.
Even if you’ve saved, calculated, and researched, the process of buying a house is still very stressful and is something that will affect your everyday life for the long haul.
The first thing you will want to consider when purchasing your first house is to crunch all the numbers and come up with a realistic budget that you can afford. There is no sense is spending time and energy on a house that just isn’t in the cards for you. In an already stressful process, getting your hopes up on something that isn’t quite within your reach isn’t going to help anyone.
You’ll want to devise a plan. The general rule of thumb when coming up with a budget is that the housing costs shouldn’t be more than 30% of your before-tax income. However, keep in mind that this number can vary.
Millennials especially need to be aware of other debts such as student loans and car payments. If you don’t calculate the amount right, you can be left struggling to make ends meet. You don’t want to have to push off retirement just because you wanted a bigger yard or a slightly larger kitchen.
Have a Buffer
Even with your plan in place and your money carefully calculated, you may be tempted to spend it all on your down payment. However, experts warn that this is not the best course of action. Of course you’ll want your offers to be competitive, but you need to make sure you have some money left over when you close.
Experts advise that first time homebuyers should have at least three to six months in your savings on the day you close. The main reason being that you’ll need the extra financial cushion. The last thing you need right after you get settled into your new home is to need a set of new tires, or to pay for an unexpected vet bill! If the offer you put down is right at your limit, you may want to consider holding off to where you can save more money, or find another home with a lower down payment.
More Than Just the Down Payment
Sure, the down payment may be the biggest cost when purchasing a new home, but keep in mind that all of the other “little” things do add up. The small fees along the way that may not seem like a big deal at that time can all accrue to more than what you were budgeting for. For instance, running your credit report, notary fees, the appraisal, and other random fees.
You’ll also need to consider things that you didn’t have to pay for when you were renting. Things such as lawn care, maintenance issues, and pest control do add up quickly. Don’t forget the moving costs, either. In addition, with a bigger place, you may also need to buy new furniture.
Not As Seen on TV
While purchasing a fixer-upper may seem like a better option because of a lower dollar amount, don’t forget about the “fixing” part. Of course you will get estimates and try to keep an open mind about extra costs, but it is important to keep in mind that what you see on TV or hear from a friend may not always be accurate. The cost to fix up your home will almost always be more expensive than you are thinking.
It may be tempting to buy a home that needs some serious TLC just to get into that nicer neighborhood, or for that extra square footage. However, if your home needs renovations, make sure you factor that into the overall cost of the house.
While a private loan may be helpful to pay for the upgrades, that can sometimes be hard to come by, especially since you just took out a mortgage. Good news: if your home appraises for more than what you paid for it, you may have the option of using your equity to help pay for any renovations.
Can The Realty Medics Help?
Absolutely we can! If you’re looking for a home anywhere in or around the Orlando area we are willing and able to do whatever it takes to make that happen for you. If you’re thinking of buying a property that needs repair and rehab, then we got you there too! And, it can be something that turns into a nice investment for you.
We specialize in Orlando property management, but we are a full-service real estate firm and we always put your interests first in anything we do together. Have other questions? Then you can always contact us and ask us anything!