3 Mistakes To Avoid When Buying a House

Buying a house is exciting! But it can also be stressful. With so many decisions, it’s easy to make the wrong one. I would know. I bought my first home when the housing market was in a very different place, and I had no idea what I was doing. I lost tens of thousands of dollars on that first home, and I’ve learned a lot since then. Here are 3 mistakes to avoid when buying a house.

Buy Below Your Budget

I’m sure you’ve heard that it’s best to “live below your means”. That is especially true when you become a homeowner. It’s easy to calculate what your mortgage payment will be. Along with interest, taxes, and utilities. But what about the added expenses that you didn’t plan for? Like home repairs, maintenance, and renovations.

Unexpected expenses will pop up. Like your water heater failing the first year you own the home. Or the air conditioner going out on year three and you have to come up with $6,000 to replace it. What about the cost to put down mulch annually, or to change out the furnace filter monthly?

If you purchase a home that is at the top of your budget, then there isn’t much left over at the end of the month. This happened to me when I bought my first house. I didn’t factor in all those extra costs for repairs and maintenance, and I was soon maxed out on my credit cards. I even had to get a loan at 25% interest to replace my air conditioner when it broke a few years in. I wasted thousands of dollars in interest over those first few years. You can avoid all that if you buy a house below your budget. This will allow for you to have extra money left over each month to put away for these expenses.

Start a “House Fund”

You can expect to spend between 1-3% of your home’s value each year on routine home maintenance. This is not for repairs, like if your roof leaks, or your fridge breaks. This is for routine things that you must do monthly, like adding salt to your water softener. Or annually, like aerating and seeding your lawn. For a complete list of home maintenance items, get your free copy of the Home Maintenance Checklist.

Knowing this before you buy your next home can help you with finding a home that fits in your budget. Calculate that extra 1-3% and add that to your expenses.

Start a separate savings account and send a certain amount to it each paycheck. Then, when the time comes for you to perform maintenance tasks, you’ll have the funds set aside to do them.

Don’t Buy Or Sell On Emotion

Imagine that you walk in to a showing and the house is beautiful. It’s your dream home. You put a contract on the house right away and schedule the inspection. At the inspection you ignore several red flags because you just love this home.

Then, you move in and you quickly realize it was a big mistake. The person that flipped your house did a terrible job. Things they did started to fall apart, fast. You soon find yourself putting more money in to your “perfect” house just to make it correct.

Unfortunately, scenarios like this happen far too often. It may not be a flipped home. Maybe the previous homeowners tried to DIY things and just didn’t know what they were doing. Maybe the house is older and systems are breaking down due to age one right after another. Whatever the reason, it’s important to pay close attention during the inspection. And don’t ignore any red flags. If the inspection shows a lot of issues, ask for them to be repaired or replaced. You can also ask for a credit to can get them fixed yourself. You’re about to pay good money for your home, make sure you are getting a good value.

Don’t sell your home on emotion either. Especially if you’re going to have to write a check at the closing table to get out from under it. Or if you’ve poured thousands of dollars in to the home for renovation and repairs, and you’ll just barely make enough at closing to pay the realtor commission and the bank. If it’s not the right time to sell and walk away with a profit, or at least a break even point, wait until the time is right, if you are able to.

This Is Just My Experience

I know it may not be possible for you to follow all of the advice given here. These are just my experiences when I bought, and sold, my first home. I wasted tens of thousands of dollars in high interest credit cards and loans. And, I sold a house that I put over $40,000 in to at a huge loss. I hope that sharing the mistakes I made will help you to avoid doing the same.

Featured Article photo courtesy of Image by Jens Neumann from Pixabay