My best friend and her husband are looking at purchasing their first home. Their family relocated to another state after her husband accepted a new job in his field. They’ve been house hunting for awhile to no avail. After an unsuccessful offer, they are now back to square one. They asked for my advice since we’ve been homeowners for quite some time and are decent with money. She said that they may have to look for loans for bad credit since they’ve had some late payments on a few of their credit cards. Here are some of the advice I gave them to make their house buying process quick and smooth.
Don’t max out your pre approved amount. Just because it looks good on paper doesn’t mean it will feel good once the payments start coming in. Many mortgage companies approve applicants for a lot higher of a loan amount than the home buyer was anticipating. I think it’s a good idea to keep the house payment around 30% of monthly pay. This is a general recommendation and depends on the person’s financial goals and comfort level. I wish when we were approved for our mortgage that we would have had this advice. There have been times over the years that I’ve felt strapped because as our income has fluctuated, our mortgage payment has not. In lean times, it would have been extremely helpful to have less debt obligations especially in the form of a mortgage.
Don’t settle and think of the long term. I know when we were looking at purchasing our first house, we almost purchased a home that was located on a busy street just because it was in a good neighborhood and we loved the property, While I think it would have worked out okay, I know we wouldn’t be as happy as we are in our current house. A lot of people purchase their first house as a starter home, but I wouldn’t assume that you won’t be there for many years. We’ve been in our first house a lot longer than I ever thought we would! There are things I wish we had (a two car garage and full basement) but overall I’m glad we purchased the house we did instead of settling on one we were lukewarm about.
Location, location, location. While there are many things you can change about a house, location is definitely not one of them. We never though we would be able to afford a house in our desired location, but with patience and a good realtor we made it happen! If you buy a house in a good neighborhood, chances are you’ll be making a good investment as property values will increase over time. In a good location, you and your family will feel safe and happy. I think that is such an important part of living in a good area!
What advice would you give first time homeowners? Are there any tips you received that have been very helpful in your journey?