How to Buy a House Without Making Gigantic Money Mistakes

November 1, 2013

buying a houseBuying 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.

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.

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.

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.

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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Ben

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Ben
Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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5 Responses to How to Buy a House Without Making Gigantic Money Mistakes

  • Charles

    I wish I had this guide when I was buying a house. My wife and I had the biggest problem deciding whether or not we were going to get a 15 or 30 year mortgage. We decided on a 30 year mortgage because of the payment. We couldn’t afford the 15 year so we had to go with the other. If I could do it over again, I would go with the 15. Nice article thanks.

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