How much you are REALLY spending. Often buying a home goes beyond the list price of the home. You have to consider things such as how much work your home might need if some things have been neglected and need fixing. The same ideas come into play when you are considering things that you might remodel or change for yourself. All of these things cost money and while doing a repaint job does not cost that much overall, hiring a contractor to do extensive remodeling and renovations can.
And while considering the price of what you are getting, you also have to know what your goals and future plans are for your new home. Are you going to want a family? Are you going to be relocating or switching jobs one year, five years or staying put for the next 50? You do not want to spend more then what you should for your home. You should also plan on buying a home that can fit a future family?
Budget. Buy within your means You can’t predict the future, there may be downturns in the economy. You may end up not having as much money as you think you might so it is wise to buy a little below what your current budget is for future financial emergencies. A lot of buyers assume that with homeowners mortgage deduction that they’ll be able to save enough to pay for an extra bit of house but some of that will not be tax deductible come tax season.
Student Debt. If you are a first-time buyer and have student debt, it can negatively affect you. Since the great recession, laws have tightened up with people with student debt. Before you were given a 12-month deferment and could discount it from their liabilities. Now you can be charged 2% of the student loan, even if you are in your deferment period. It is suggested that you should enroll in a properly documented income-based repayment plan so that your lender can measure your liabilities before buying a home.
You do not have to buy a house. Buying a home is for most people the biggest financial decision they’ll ever make. It comes with a fair share of risk and is a big commitment. For some people, a better option is to rent which is a good way to get your feet wet with the home-owning process. Renting allows you to be more flexible and is a good way to save money if you are not completely sure of your finances.