Five Ways to Match Your First Dream Home to Your Budget
You are finally ready to buy your first home. Congratulations!
Now comes one of your toughest decisions, finding a home that comes close to meeting your needs and dreams, but stays within your budget.
Accomplishing this goal requires a certain mindset, along with some practical cost-saving homebuying strategies.
One of the best approaches to buying your first home is to begin with the mindset that this is just your starter home. If you are like 90 percent of homebuyers, this will not be the place that you spend the rest of your life. And, that’s OK!
According to a recent study by the moving and storage industry, most people can expect to own three homes during their lifetimes. The average time a family stays in a home prior to moving is six years. During this time, you are building equity in your starter home, which can be used to step up to a “dreamier” home.
Balancing the Must-Haves and Would-Like-to-Haves
Before you begin looking at homes, create a list. In one column, list your must-haves, and in the second column list your would-like-to-haves. For instance, while a walk-in pantry, pool, and hardwood floors throughout might be what you have been dreaming about, are these really must-haves? Not to burst your bubble, but these items should go in your “Would-Like-to-Haves” column for a starter home.
Older Home vs. New Construction
While you might prefer to buy a new home over an “existing” home, one that someone else has lived in, newer homes are more expensive. In fact, new construction homes could cost you up to 20 percent more than a comparable older house. Buying an older home could add up to substantial savings and allow you to find a home in your budget that offers more items off your “Would-Like-to-Have” column.
If you have the desire, ability, and skills, buying a home that needs a little fixing up can save you a lot of money. Selecting a fixer-upper for your first home does not mean buying a money pit, such as home that needs serious repairs or has structural problems. We are talking about looking at older homes that just need a little love and could be your dream home in the making. For instance, the kitchen countertops could be replaced with your dreamy granite; the carpet with hardwood; or the ugly bath and tub with a beautiful new shower unit.
New homes are going up all the time in trendy areas. But these swanky locations are where you will also find the most expensive homes. Have your real estate agent look for homes in attractive older neighborhoods. Of course, we are not recommending a neighborhood where there is high crime, or it is rough around the edges. Look for older neighbors with homes and yards that are well maintained.
Speak to a Mortgage Specialist
Before you even start your search, it’s best to define your budget. Determine how much of a down payment you can afford, the amount of debt you currently carry, and how much of a monthly mortgage payment you are comfortable having. Using our Home Buying Calculator can help.
Once you have these numbers tied down, approach one of First National Bank's mortgage loan specialists to discuss options, including prequalification for a loan amount that stays within your budget.
- first-time homebuyer
- mortgage loan