When you’re buying a house, it’s not easy to remove your emotions from the process. It’s all too easy to find a home, fall in love, and stretch that home-buying budget a bit too far. Avoiding overspending is one of the keys to long-term happiness with your home purchase. There are plenty of simple, proven ways to avoid overspending while still buying a home you love.
1. Honestly Assess your Financial Situation
Before you buy a home, one of the best things you can do is take some time to fully and honestly assess your finances. Look at your monthly expenditures, income, and debts and determine what type of home investment you can comfortably afford. Most lenders recommend that the monthly payments on all of your debts, including your mortgage, should not make up more than a certain percentage of your gross monthly income. You can also save huge amounts of money if you’re willing to relocate. Location is key as well. Ottawa Real Estate tends to offer cheaper housing, largely due to the presence of local universities.
2. Shop Around for Mortgage Lender and Homeowners Insurance
Interest rate is one thing, but your Annual Percentage Rate (APR) can hugely impact your purchasing power because it directly affects how much your mortgage will cost your family each month. Compare and analyze the loan costs from multiple lenders to make sure you’re getting the most bang for your buck. Quotes for homeowner’s insurance can vary by as little as a few dollars a month to $100 a month and more. Even a few dollars per month add up quickly over the life of a loan, and such a discrepancy can definitely impact your family’s purchasing power. Make sure to get at least three quotes. However, don’t simply pick your homeowner’s insurance because it offers the cheapest rate; cheaper is not necessarily better. Ask for recommendations and reviews. When it comes to insurance, you want to make sure you’re working with a reputable company that will pay your claim if misfortune befalls your property.
3. No Matter How Many Houses You Buy, the Sticker Price is Only One Piece of the Puzzle
And when you buy a bigger or more expensive home, almost everything costs more. For example, more space generally means more square footage to heat and cool — in other words, higher utility bills. And nicer, more expensive properties almost always mean higher property taxes and pricier homeowners insurance premiums. A bigger house also means everything is bigger and more expensive to repair. A bigger roof will cost more than a small one, and the more windows you have, the more expensive it will be to upgrade or replace them. Flooring is typically priced by the square foot, so more carpet and tile will always lead to higher costs. A bigger yard means more landscaping and a longer driveway means more concrete to pour. The list goes on, and all of those additional costs can add up quickly.