Right now is a great time to consider buying a house. The market has lots of homes for sale, and interest rates are good. One common mistake that people make when purchasing a house is over extending themselves so that all of their money goes into their house and they become house poor. Here are some things that you can do to prevent becoming house poor.
1. Buy Lower Than Your Budget Allows
When you apply for the loan, the lender will give you a number that they think you can afford for a home loan. They will determine this number based on your income and your expenses. In some cases they will approve you for far more than what you were initially trying to spend. Don't let this fool you. Just because the bank will loan you more money doesn't mean you should buy a bigger house.
Instead, you need to determine beforehand how much money you are willing to spend each month on your house payment. Then, even if the bank offers you more money, don't take it. The lender doesn't know your family budget and how you want to spend your money. If you don't want all of it to go into the house, then don't let the lender tell you what you can afford.
2. Go Slow To Make Improvements
Right as you get into the house, you may be anxious to start making improvements. If it is a new house, you may need to landscape the house and add things like blinds and appliances. If the house is older, you might want to change the carpet, repaint or do a myriad of other things. Although improvements to the house are fun, they do not need to be done immediately. In addition, do not take out another loan to make improvements. Wait until you can pay for it in cash. This will help you to keep your house expenses low.
3. Factor In Additional Expenses When Purchasing The House
It is a myth to think that the only expense for your house will be your mortgage payment. Instead, there will be many other expenses. If the house has a large yard, you will need to purchase lawn equipment or pay for landscaping. Your utility bills may be higher; you will have to pay for repairs and so forth. If you fail to factor in these things, you could be in big trouble.
By implementing these tips, you can avoid becoming house poor. Talk to a company like Premium Mortgage Corp for more help.
When I started my own company, I knew that I needed a little business capital and fast. In an effort to raise money, I worked with various lenders to discuss loans, financing, and special terms. Unfortunately, I quickly discovered that not every loan was created equally. Some loans had almost predatory terms like high interest rates and penalties, while others were completely fair. Fortunately, a business consultant of mine taught me about loans and financing, so that I could make better choices in the future. The information on this blog saved my business, and I know that it can help yours too.