10 Tips for First-Time Home Buyers (Tips 1-5)

Your Hierarchy of Needs 10 Tips for First-Time Home Buyers (t...

10 Tips for First-Time Home Buyers (Tips 1-5)

#1 Decide what you want in a home. There's no point in looking at two-bedroom houses if you need three bedrooms. And there's no point in looking at country property if you want to live in the city. Sounds obvious, right? Well, there's also no point in looking at $500,000 houses if you can only afford to spend $350,000, so don't let anyone talk you into looking at more house than you can AFFORD just because some dumb lender will give you more money than you can afford to repay. Know your own limits. Then decide exactly what kind of home you want that fits within those limits.

#2 Know how much mortgage you can afford. You can go and get preapproved for a mortgage, but that doesn't mean you have to take all the money a lender will give you. Your housing should be eating up no more than 35% of your total net income, assuming you're paying off debt too. That 35% isn't all mortgage; you have to pay property insurance, property taxes, utilities and maintenance too. If you're debt free, you have another 15% of your net income that you could spend on housing… or on having a life… but not both.

#3. Look at what's available on the market. There may be particular areas in which you want to live, or a particular kind of home you want to buy. Look at the recent sales to set a realistic expectation for what you can have. No point in every viewing being an exercise in frustration.

#4. Think about the extra expenses of being a home-owner. If you buy a home with a pool, you'll need pool stuff. If you buy a home with a yard, you'll need garden stuff. You may need window coverings. You might want a snow blower if you've got a long driveway. How about appliances? Don't let these things surprise you into using credit.

#5. Don't look at the way the home is decorated. There's a whole industry that's grown up around making a place look good enough to eat. And if you bite, you're a sucker. The house doesn't come with the artwork or snappy furniture. You're looking at the bones of the house to see if they'll work for you. This goes hand in hand with…

Ha! A cliff-hanger… tune in tomorrow.