Buying a new home is so exciting! When you buy your first home, you will want to do so as frugally as possible. Such a big purchase can cost you a lot of extra money if you are not careful!
Looking for Tips Before Buying a Home
Are you a first-time frugal homebuyer looking for the best tips before purchasing a new home? Then, we got you covered. After someone asked a popular online frugal community for their best advice, these are the top-voted responses.
1. Don’t Buy More Than You Can Afford
Follow the 28/36 rule. Your mortgage should be no more than 28% of your monthly taxable income and 36% of your total debt. No one is paying that mortgage, but you want to ensure your mortgage is affordable so you’re not “house poor.”
2. Check for Issues
Check for issues. One user advised, “If possible, visit the house you want to buy when it’s raining. If there are any problems with leakage or drainage, it’ll be harder to hide.
Even though you must legally disclose known issues here, if the owner isn’t competent to sell the house and a long-lost relative is selling it for them, they might not know of problems or maybe scummy in general.”
3. Don’t Rely on Inspection
Many in the thread agreed that you should bring your flashlight to tour the home. You can check behind pipes, check the crawlspace and attic, etc. Of course, you want to check with your OWN eyes that everything is working in order.
4. Take the Commute Into Account
A long commute is not fun and takes you away from your home. So when shopping around for a home, consider how long your work commute will be.
“Commutes are a hidden expense or something people don’t consider. Also, that commute is your time. So it’s effectively extra hours of work that you don’t get paid for,” another confirmed.
5. Secondhand Is Ok
You put a lot of money down when you buy a home. Then you have to furnish and decorate it. It can be fun, but it kills your budget. So be ok with getting only some of the furniture and decor you want right now.
“Even though my first house was about the same size as my apartment, I found it required a lot of stuff to maintain, and it quickly added up,” confessed one. Save up for your desired purchases and make do with what you have until you can purchase them.
6. Buy a Duplex
Buying a duplex and living on one side can give you a rental property for future income and pay for half or more of your mortgage. One user admitted, “My mortgage is $2170; my tenant pays $1550 monthly. And I’m only paying $720 a month for my mortgage.
Another added, “I was a first-time home buyer who bought a duplex. It was honestly the best financial decision I have ever made. It may seem a lot upfront, but it is well worth it when someone pays for most of your mortgage.”
7. Account For Additional Costs
When you buy a home, your realtor will review your monthly mortgage cost. You will see even more monthly fees like taxes and insurance during closing. You need to take these costs into account as well before you get to the closing table.
“I thought I could get a nice place, but I should have set my sights much lower. I ended up only having the house for two years,” another warned. After she signed up for her home, the extra cost she had not considered crippled her financially.
8. Make Extra Payments
Try to budget your mortgage with an extra payment. Pay either an additional monthly payment once a year or an additional amount monthly. It makes a difference in the long haul.
If you pay an additional $100 monthly on a 30-year loan, you can cut your loan down to about 24 years. Advice from a former realtor, “make one extra payment each year. That simple step cut the years of mortgage payments in half.”
9. Check Out the Neighborhood
Many in the thread noted that you couldn’t pick your neighbors, but you can see how they are before moving next to them. Drive by the home you are interested in at various hours of the day and night to see what goes on in the neighborhood.
Also, talk with the neighbors, and see why they like or don’t like to live in the neighborhood. For example, one user confessed, “I purchased a home that would only let people come and view it on days when the local sewage plant wasn’t airing it out, so we moved into a persistent sewage smell that we were unaware of before moving.”
10. Don’t Settle and Make a List
Finally, many recommended that you make a list of things you want, the things you refuse to tolerate, things you might be willing to deal with, and how low the price would have to get for you to deal with them.
Make a pros and cons list for each home you tour that you like. Then, compare this list with your needs and wants list. It will help you eliminate unnecessary homes that don’t meet your criteria.
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This post originally appeared on A Dime Saved.