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Financial Tips for Before You Buy a House

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Buying a home can be a stressful and expensive experience.  Home hunting, closing a deal, and moving in can take a lot out of you.  When we were first thinking of buying a house, I started to make lists of things we would need to pay attention to.  I knew we were going to need a mortgage and that homes come with extra expenses as well.  Here are a few financial tips to keep in mind before you buy a house.

Check Your Credit Report

If you will need a mortgage, your credit report will be one of the most important things for you to know about before buying a home.  I would highly suggest checking your credit report before you even apply for loan preapproval.  You can check each of the main credit reports – Transunion, Experian, and Equifax – for free once a year at AnnualCreditReport.com.  I personally check each one of my main reports every 4 months just to make sure nothing hinky pops up.

Tighten Your Budget

I would also highly suggest tightening your budget when you start thinking about buying a house.  The mortgage payment will not be the only extra expense that you will have to handle.  You will also want to remember the annual cost for home owner’s insurance, property taxes, and any homeowner’s association fees that you will have to cover.  Even if they are all paid annually, I bet they will be easier to pay if you save for them year round.

Plan for the Unexpected

Owning a house is a constant test of patience.  Things break, maintenance must be done, and the unexpected will take a huge bite out of your normal budget.  Before you buy a house, make sure you will be able to budget in a small emergency fund for your house.  Try planning for at least one big expense each year. 

My husband and I feel comfortable with a $10,000 home maintenance emergency fund.  We socked away $500 a month until we hit that amount and then redirected that $500 towards general savings.  Anytime we have to use the home account, we simply start adding back in $500 a month until it returns to our $10,000 goal.  I like the fact that I never have to worry whether we can handle something small like a toilet leak or something big like a new air conditioning unit.

Research Property with Resale Value

Before you buy a house, you will probably look at dozens or hundreds of properties online.  Unless you think you are buying your forever home, keep in mind resale value as you look.  Even if you don’t have kids, potential buyers in the future might, so buying a house in a really bad school district may not be the best idea.  I’d also look into crime statistics and the details of whatever homeowner’s associations you may have to deal with. 

My husband and I got lucky and bought our home in a good school district with less crime than other Houston suburbs.  We also ended up with no homeowner’s association fees since our neighborhood was permanently incomplete.  This has worked out well since we have good neighbors, but we did not research any of these things in advance and it could have turned out very differently.

What other tips do you have for someone before buying a house?

{ 6 comments, please add your thoughts now! }

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6 Responses to “Financial Tips for Before You Buy a House”

  1. Gary says:

    I think my one tip for buying a home is to make sure you REALLY like it. I know that sounds simple enough but I’ve seen friends move too fast into a purchase that wasn’t right for them. You’re not ordering lunch here so I always tell people to take their time.

    If you’re not too picky then there are lots of nice places but there are also lots of places that don’t suit you (or suit your budget). Just my thoughts on it.

    • skylog says:

      this is a good point that i can certainly agree with. a co-worker of mine has become “obsessed” with buying a house recently. i fear that the desire to get the house will cloud his perception of the actual house in question.

      that said, this is a good topic that i will have to send along (without my comment of course)

    • Crystal says:

      Good thoughts! So true!

  2. I agree about having a “home” emergency fund. Having one with $10,000 is awesome! Way to go.

    We have an emergency fund, but it is for general. I have really felt the pinch of using the regular emergency fund as a house emergency fund when we had to have trees cut down, new windows and a new heat pump in a 6 month span.

    Thanks for the advice!

  3. Alan says:

    One thing my wife and I originally started doing was looking at townhouses that needs work but fits into our budget…ALMOST bought one that needed work and more maintenance. It was a good thing that the bid was rejected.

    We later realized that it was just simpler to just buy a nice condo for the same price that needs ZERO work done on it.

    So yes, you can find nice deals with foreclosures and short sales…but most of those places will need work. You need to ask yourself whether or not you will ACTUALLY put the time and money to fix the place up. That and if the time and money spent will be worth it in the long run (house value).

    Take your time looking for a house, never rush into a project home just because its cheap.

  4. Rawat says:

    One of the main important thing is research. Always do research. You can never do enough research. A lot of people dive into the property market head first and blind folded, and that’s when people make bad purchases. If you like a property, find out about the surrounding area; find out the local crime rate, find out how much properties in the area recently sold for. Find out EVERYTHING. There are tonnes of websites out there that will give you all these details at no cost.


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