Photo: HGTV's FrontDoor News
Mistake #6: Buying a house you can’t afford
Just because a lender is willing to loan you more money than you thought you wanted to borrow, that doesn’t mean you should change your home buying plans. Buying more home, or anything else you really can’t afford can quickly lead to headaches, stress and money worries. Keep in mind you are buying a shelter for yourself which will probably appreciate in time but don’t forget you will still need money for other things.
As a rule of thumb, I would recommend your mortgage payment be less than 25% of your gross monthly income unless you buy an energy-efficient home or one with a HERS index rating of less than 60. Obviously, the higher your utility bills the higher that percentage gets to where it can become 40-50% of your gross monthly income. Besides your mortgage payment and utilities, you need to be prepared for additional costs of homeownership, such as homeowners insurance, property taxes and maintenance which could be more on a wood structure vs. concrete block depending on the area you buy.
Consider scaling back on the size of the home you’re looking for in order to make the whole investment fit into your budget. Keep in mind you want to own the house and not have the house own you so you can’t afford to do anything else or you take on credit card debt for vacations or emergencies.
Photo: HGTV's FrontDoor News
Mistake #7: Buying a foreclosure or fixer-upper without doing your research
Some homebuyers are so set on finding a bargain, they overlook the fact that buying a home that needs repairs can be a stressful and expensive project. Before buying a fixer-upper, get estimates on any necessary repairs and renovations and make sure they will pay for themselves in increased property value.
The foreclosure market is also full of opportunities, but it’s important to be aware of the potential pitfalls before buying a foreclosed property. Be certain to check tax records, deeds and Homeowner Associations (if applicable) for delinquent property taxes, encumbrances or overdue HOA fees.
Photo: HGTV's FrontDoor
Mistake #8: Not researching the neighborhood
What good is having your dream home, if you don’t like the community where it’s located? Before shopping for a home, shop for a neighborhood. Make sure it’s a good fit for your lifestyle — figure out how long you want your work commute to be, how close you want to be to amenities like shopping and nightlife, and which school districts are the best. Even if you don’t have children, living near good schools raises your property value. Visit the neighborhood several times and at different times of the day. The biggest incentive for finding a quality community: a great neighborhood will increase your home’s value, while a bad one will drag it down.
Mistake #9: Thinking short-term
The house you plan to buy should be a place that feels like home to your family and it’s important to remember that it’s also a huge investment. When looking for that perfect home, you should also think about reselling your home down sometime in the future. Chances are good you will move again due to a new job, retirement, moving closer to family, etc. so you want to increase your chances of a quicker sale.
Look for homes in desirable locations and consider buying a smaller home in a more expensive, sought-after neighborhood. Be certain to look for features that future buyers will want, such as energy-efficient upgrades, upgraded communication capabilities (“smart” house or CAT 5 wiring,etc), drought tolerant landscaping and extra storage space. If you are a DIYer look for a home with good structural details and site location and plan to do the cosmetic upgrades yourself, but be certain to include those remodeling estimates in your mind when determining what you can afford.
Remember the adage “don’t buy the largest/most expensive home on the block”. Owning the “baby” on the block provides more opportunity for upgrades and appreciation.
This is by far one of the best SIP's journal I have viewed! I am fascinated by the radiant floor heating and cooling.
Not only is La Mirada Homes in Tucson, AZ building almost net-zero homes, but Michael Ginsburg and the S.E.E.D Home will be receiving the EVHA award (Energy Value Home Award) from the National Association of Home Builders Research Council (NAHBRC) week in Orlando, FL at the International Builder Show.