How to Buy a House Without Making Gigantic Money Mistakes
November 1, 2013
Buying a house involves making lots of decisions, many of which are daunting because of the high cost of real estate. I spent 20 minutes on the phone with a friend of mine a while back talking through various options and considerations for selling his home and buying a house in our area. I could hear the stress and uncertainty in his voice and sympathized with how he felt.
The Fear of Mistakes
Remembering back to our experiences of buying a house I can recall that in the back of our mind the whole time we were worrying that we would make a gigantic mistake. If you only buy one or a few houses in your lifetime you don’t go through the process very often and a rookie mistake could end up costing you thousands of dollars.
It’s not just the potential cost of a mistake that sets you on edge, it’s also the fact that you’re making one of the biggest commitments of your life and making decisions that may live with you for the next 20 or 30 years – or even longer.
It was no surprise to me that when I asked readers a while back what kept them up at night one of the big things was finding a house they could like yet afford.
Finding Money to Buy a House
Unless you’ve saved up enough money to pay for your house with cash, you’ll have to borrow funds to buy a house. You’ll have to figure out how much you’re eligible to borrow and how much you’ll expect to pay based on your financial situation.
If you’ve struggled with finances in the past and have bad credit or a history of bankruptcy or foreclosure that makes it more difficult and we touch on that in one of the articles. Also remember that how much you’re able to borrow usually isn’t the same as how much you should borrow. You may be approved for a loan amount that’s actually higher than what you can afford. But we’ll get to that in the next section.
- How to Improve Your Credit and Buy a House
- 12 Steps to Improve Your Credit Score
- Mortage Pre-Approval When Buying a House
- Down Payments and Private Mortgage Insurance
Buying a House You Can Afford
As I mentioned earlier, buying a house is probably one of the biggest financial commitments you’ll ever make. You want to find something that meets your needs but also a home that won’t put you in the poor house for decades to come. So here’s a look at figuring out how much you can afford and some ways to help stretch your dollars to get more house for less.
- 3 Ways to Buy More House for Less Money
- How to Buy a House in an Expensive Market
- How Much House Can You Afford?
Financing Your Home
Decisions about financing your house can potentially save you or cost you tens of thousands of dollars over the life of a home loan. If that’s not enough to stress you out, picking the wrong type of loan could even mean the difference between being able to make your payments or facing foreclosure. Here’s a look at the implications of the different loan options and ways to keep your borrowing costs down.
- 30-Year Mortgage vs. 15-Year Mortgage
- FHA Loans vs Conventional Loans
- How to Use a Mortgage Calculator to Compare Home Loans
- 6 Key Factors for Home Mortgage Rates
- Finding the Best Mortgage Rates
- Home Loan Closing Costs
Paying for Your House
Once you finally find the right house and the right loan and get moved in your house payment is due every month for the length of your loan. If it turns out that bill is more than you can handle or is just higher than you’d like, here are a few things you can do to help ease the pain of a monthly mortgage.
- What to Do if You Can’t Pay Your Mortgage
- How to Sell Your House Without a Realtor
- 5 Ways to Pay Off Your House Early
I hope these articles help take some of the uncertainty and stress out of the process of buying a home.
Have you made any money mistakes when it comes to buying a house? What can you teach others? Leave a comment!
This article was originally published May 12, 2011.
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All posts by Ben Edwards