If you are looking to buy a house, I have a bunch of home buying tips that will help you sort through all of your options, understand the real cost of a home (and help you save money), and make the right choice.
Buying a house is a huge purchase.
In fact, it is usually the largest purchase a person will ever make.
The median U.S. home value is $226,800 and the median price of homes currently listed is $291,900, according to Zillow. And, there are some areas that have much higher average home prices, like four to five times more.
Purchasing a house is a huge commitment, and it’s easy to get excited and forget to think about some very important things before plunking down a huge amount of money. There are just so many factors to think about, and not everyone will have the same concerns.
To help you through the home buying process, today’s post is going to be like a mini first time home buyer guide. I’m going to cover some of my best home buying tips, like:
- Whether or not you should rent instead of buy
- How to set a budget (one of the most important steps to buying a house for the first time)
- Deciding what you want in a home
- How to research the true cost of a house
- Thinking about how long you’ll live in an area (recouping your costs)
- How to avoid feeling rushed
- Do you really need the house you’re about to buy
Whether you are a first time home buyer or if this is your second house or more, these are all things you should be thinking about.
Actually, these are the exact same things me and Wes have thought about before buying our sailboat and RV. They might not be “normal” homes, but they are what we live in. Plus, they are still very large purchases that need to be carefully thought out.
The home buying tips that I’m about to give you are to help you analyze what’s best for your situation – whether that’s a 5000 sq. ft. house, a 500 sq. ft. tiny home, an RV, a condo, etc.
I’ve said it already, but buying a house is a large purchase! And, everyone has felt that dreadful feeling that comes after making a large purchase and realizing that you have made a mistake. Perhaps you don’t realize for months or years later, but you eventually understand that you should have thought out your purchase a little bit more.
No one wants to feel this way after buying a house!
Articles related to buying a house tips:
- Smaller Can Be Better- Maximize Your Savings With A Small House
- How I Paid Off My $400,000 Mortgage In 7.5 Years, Before I Was 32
- 20 Ways I Saved a 20% Deposit To Purchase My First Investment Property At 20
- 11 Tips For Renovating An Abandoned 115 Year Old House On A Budget
- Can You Remove PMI From Your Mortgage?
- How To Save For a House While Renting
Here are my best home buying tips.
Should you rent instead?
Before we started RVing, we sold our house and rented one for a little while. This raised quite a few eyebrows and led to questions about renting vs. buying from nearly everyone.
I even had several people tell me that I was making a stupid mistake.
I wasn’t surprised, though. Many people believe the myth that if you are renting a home you don’t know how to manage your money and that buying is always better, no matter what.
That couldn’t be further from the truth.
Sometimes buying can be the better decision, but there are times when renting can fit a person’s situation much better.
Buying a house can have a lot of positives, but that doesn’t mean it’s the right step for everyone.
To determine if renting is better for you, you’ll want to think about things such as:
- How long you think you’ll live in the area.
- Whether or not you’re ready to purchase a house, financially and/or responsibility wise.
- Buying a home sometimes may be cheaper than renting, and the other way around.
Nearly everyone says that a house is a good investment. Many people will even go as far to say that doing anything other than owning a house would be a complete waste of money.
However, I don’t agree with that at all.
Buying a house isn’t for everyone. You shouldn’t just jump at the opportunity to buy a house, especially any ol’ house. And, you should think about all of the factors before deciding that buying a house over renting one is the best and only decision for you.
For home more renting vs. home buying tips, please read My Opinion Of The Great Renting vs Buying Debate for more information.
Set a budget before you look at homes.
“What’s the smartest way to buy a house?”
The smartest way to buy a house is to first think about your budget.
One of the first things you will want to do is to set a budget – you can’t go very far in the home buying process without one. It’s how you will know what you want to be pre-approved for, and a realtor will need that information to really help you shop for homes.
You will want to set yourself a budget when it comes to the home as well as all of the other expenses that go along with owning a home.
You will want to look at your overall financial situation and analyze:
- The income you earn.
- The stability of your job.
- The amount of money you have saved for the down payment, other home expenses, etc.
- Your credit history and credit score.
- The total monthly amount you feel comfortable paying for a home. Make sure you look at all the costs involved!
- Your total amount of debt.
When buying a house, it takes realizing all of these factors to understand what you can truly afford and be comfortable with.
However, many people justify buying a house that is over their budget, but that is a bad plan.
See, banks often pre-approve people for a mortgage payment that is higher than what they can afford to pay. You pre-approval number is not a good gauge of what you can afford because it doesn’t factor in the total cost of the house.
What you can afford takes that above list into consideration, not just the number a bank gives you. Because of that, it can be a very bad idea to go over the number the bank pre-approves you for. You should always stick to an amount that you can afford.
When determining what you can afford, you will want to think about ALL of the costs that come with buying a house and living in it. This means that your research should not end with the purchase price of the house – it actually goes way past that, as discussed in a later section of my home buying tips.
Think about what you want in a home.
If you are like most people, you’ve spent years thinking about what you want in a home.
Now is the time to make a list of those things. This is an important step when it comes to home buying for beginners.
Buying a house can lead to a crazy amount of new feelings – happiness, stress, excitement, and more. This can sometimes make every house you look at seem like the perfect one, and that’s because they all seem so new and exciting. This even happens with houses that don’t have everything you need. And, it definitely happens with ones that have more than you need.
Before you put an offer on a house, you should think about the reasons for why you want a specific house. This is one of the first steps to finding a house that’s right for you, as this can make sure you are getting exactly what you want and need, rather than just being happy with any home.
I recommend creating a wish list that includes all of the things you want in a home. Your wish list could include things like:
- The square footage of the home
- Size of yard
- If you want a fenced in yard
- How many bedrooms and bathrooms you desire
- The age of the home
- The quality of the schools
- The parking situation and whether or not there is a garage
- The size of the kitchen
- Pool or no pool
- Style of home
- Whether you want to be in the country or the city
- Your budget, and this one is extremely important!
And, you’ll also want to create a list of things that you want to stay away from, such as if you don’t want a place with a pool, a home with a lot of yard maintenance, a home that is a fixer upper, and so on.
By having this wish list on hand, you’ll know exactly what you should be looking at, and what you should avoid.
Research all of the expenses.
Like you just read, the listing price of a home is not all that you should look at.
When you find a home that you think is right for you, you need to make sure that you can afford all of the costs that come with that home.
Just because you can pay the monthly mortgage payment doesn’t mean that you can afford everything else that goes with it. There are ongoing costs when buying a house, which is something that many homebuyers forget about.
In fact, U.S. homeowners, on average, spend more than $9,400 per year in hidden homeownership costs, and maintenance expenses cost homeowners an average of $6,300 per year in unavoidable hidden costs, according to MarketWatch. These include things like homeowners insurance, property taxes, and utilities. So, this is one of the best home buying tips to help you stay out of a bad financial situation.
Before making a home purchase, you should think about how much the home will cost you in the long run. There are many ways to think of this, such as:
- Property taxes. These vary widely from town to town. You may find yourself looking at two similar houses with similar price tags, but the property taxes may vary by thousands of dollars annually. That is a LOT of money. While it may seem small when compared to the actual home purchase price, remember that you have to pay property taxes annually, and a difference of just $3,600 a year is $300 a month.
- Gas. Many homes use gas to run the hot water heater, the stove, and so on.
- Electricity. Generally, the bigger your home, the higher your electricity bill.
- Sewer. This isn’t super expensive, but it is generally around $30-$50 a month.
- Trash. This isn’t super expensive either, but it does cost money.
- Water (and possibly irrigation). Depending on how you use water and where you live, water bills can vary widely. I know many who live in areas where the average water bill is a few hundred dollars each month.
- Home insurance. Home insurance can be cheap in some areas but crazy expensive in others. Don’t forget to look into the cost of earthquake, flood, and hurricane insurance, and know that it can add up quickly depending on where you live.
- Maintenance and repairs. No matter how old your home is (even brand new homes), repair and maintenance costs will eventually come into play. In fact, U.S. homeowners pay an average of $3,435 per year in annual optional costs, including house cleaning, yard care, gutter cleaning, carpet cleaning, and pressure washing. But, don’t forget about things like needing a new roof or other repairs that may come up! Those are big expenses that you will need to be able to save up for.
- Homeowners association fees. This can also vary widely. You should always see if the house you are interested in is part of an HOA. Often, the fees are high and involve rules you may not like.
- Home furnishings. Furnishing your home can be done cheaply, but I know some who buy huge homes and can’t afford to put anything in them, such as a table, a bed, and so on. Why own a $500,000 house if you don’t have any furniture?
Always remember to add up the total cost when deciding to buy a house!
Estimate how long you will live in the area.
This is one of the home buying tips you might not think of because you are so anxious to be moving. How could you possibly think about moving again already?!
One of the best tips before buying a house is to think about how long you will live there.
Here’s why this is important to think about – it usually takes around five years to recoup the costs you paid to purchase a house. If you only live in a house for one or two years, then you may lose money on closing costs, due to the volatility of the real estate market, and more. Plus, it usually takes some time and legwork to buy a house, so you may not want to do it again so soon.
This is why you’ll want to think about how long you’ll be living in the area before you purchase your home.
You’ll want to make sure that the house will be suitable for you for at least five years, so you’ll want to think about things such as:
- Are you happy with the area?
- How are the schools?
- Is the house big enough if you plan on starting a family?
- Do you plan on working in the area for at least 5 years?
And so on.
You really need to think about your future when deciding to buy a house.
Don’t feel rushed.
“How long should you give yourself to buy a house?”
This is one of the home buying tips that is hard during a seller’s market, which is what’s happening in many areas right now. Knowing that homes are selling very quickly, you may feel rushed to find a house and put an offer in.
It’s also tempting to jump on a house the minute you find something you like, but if the purchase can wait 24 hours, then you may want to delay it. This will allow you more time to think about the purchase, go over your budget again, let any butterflies you have about the home purchase go away, and so on.
You will be able to make a much more rational decision if you think about your decision for at least 24 hours.
Plus, for all you know, you may even realize that you don’t want the house at all!
Do you really need or want that home?
“How do you make sure you get the house you want?”
Finally, the last of my home buying tips is to think about whether or not you actually need the house you are about to buy. It sounds easy enough, but many people do not even think about asking this question. When in fact, it is one of the most important questions to ask when buying a house (or any large purchase for that matter).
Really dig deep and ask yourself this simple question. Sure, you might think you want the house, but have you also been able to spend time thinking about the rest of my tips?
Do you know the full cost of the house? Are you okay spending that much? Does the house have everything you need?
Purchasing a home is a huge investment, and it deserves a lot of time and thought for you to make the best decision.
Have you bought a home recently? What other home buying tips should people think about?
I may look into purchasing a half a million-dollar home in the next three years. I know there’s a lot more to learn concerning real estate and “negotiating lower home buyer prices.” Real estate continues to be a very lucrative business because one can be a buyer and a seller at the same time and leverage “real estate” to their advantage, whereas the house the purchase now will end up being free later, when they purchase and flip another home to a home buyer.
I never liked renting because I always felt I was throwing $ gUaP $ away in the past.
Jess @ The Exceptionally Ordinary Life says
These are all excellent tips, Michelle! I couldn’t agree more. My husband and I are working towards becoming debt free, and while the temptation (and gentle pressure from in-laws) to buy is there, we realize we couldn’t possibly afford buying at this time, so we are content with renting until the time is right.
Rob @ FinanceAbilities says
Great article Michelle. I’m planning on buying my first home within the next couple of years and I’ve been thinking about all of the points you have made here. I totally agree that buying is not necessarily better than renting from a financial perspective. I think the main advantages to buying are the non-tangible psychological issues, and the desire for stability. In many areas of the country, buying makes very little sense from a financial perspective.
Thanks again for the helpful post!
Look at renting as a home buyer in training and a future online “side hustle millionaire.” When you pay rent, you’re not only just living in temporary quarters, but you’re also thinking of new ways of own real estate. 🙂
Great tips Michelle!
I recently bought a home and was pre-approved for over twice what my budget was. Like you mentioned Michelle, often you’re pre-approved for what you can “afford” on paper, not including any extra expenses. I’m glad I didn’t go above my budget because of all the extra costs that have come as a result of buying a home (some planned, some not planned).
A couple things I encourage anyone to consider if you decide to buy a home:
1- Shop around for a mortgage. Check out small and big banks as well as mortgage brokers. I got 4 pre-approvals and went with a small, local bank. While each pre-approval checks your credit, it is reported to credit reporting agencies as a group credit pull, so it shouldn’t affect your credit too much.
2- Put down enough of a down payment to avoid Private Mortgage Insurance (PMI). Figure out the math for your specific situation, but avoiding PMI saved me several thousand dollars over the course of about 5 years.
Buyside Hustle says
Good article. People definitely need to realize that there are a ton more expenses than just the mortgage each month. Taxes, HOA fees, maintenance can be a killer…
Would also add that people should try to wait until the next recession to buy a home. The home for many is the only real investment, so need to try to time the purchase correctly.
Mortgage rates are coming down and should be going down further over the next year to two. Prices are beginning to decline in certain markets as well, which should continue.
I agree with all these points. In general I think too many people consider renting a waste if buying is an option. But there’s so much more that goes into it than that. The costs associated with buying are much more complex than with renting. One of the biggest considerations that I think often goes overlooked – especially by military buyers – are the tax implications of selling before you’ve met the primary residence test (2/5 years) or what will happen if you need to move but can’t sell and have to either take a loss or convert the property to a rental. Also, I’m a pretty firm believer that if you can’t afford to put 20% down, then you can’t truly afford to buy the home – avoid PMI at all costs…
Make sure your home isn’t in a high risk flood zone. This really crushed me as I was preparing to live in my dream home
Wholesome Wallet says
Great post. Buying a home is one of the most significant financial outlay in anybody’s life. Getting all the help and tips is very beneficial. Thanks for enriching our lives Michelle.
Ellie Davis says
I was not aware that one of the most important steps to buying a house is knowing how to set a budget. My sister is thinking about buying her first house, and we are looking for advice to help her. I will let her know about the benefits of knowing her budget before buying her first house.
Buying a new house can be a hectic job if you don’t have any idea about the basic things you should take care of. These tips are really helpful.
Darrien Hansen says
I love that you mentioned how you should make a wishlist to help you determine what you are looking for in a house. When my cousin moves out of his parents’ house, he would like to find a home that has a big garage so that he can easily maintain his new car. I’ll let him know that he should consider making a wishlist so that he knows what to look for in a house.
Jay Jorgenson says
My aunt is having a hard time searching for a house that fits her budget. I like how you mentioned creating a list that includes all of the things you want in a home Thank you for the advice. I’ll recommend my aunt to hire a real estate agent so she can get help in finding the right home.
Danish Khan says
Thanks for this information but my question is please advise me how to sell my house fast?
Oscar Morrison says
I appreciate you pointing out that I should look at the quality of schools nearby as well as all of the qualities of the house itself. My wife and I don’t have kids yet, but we might someday, and we don’t plan on moving again any time soon. It would be good to know what we’re setting our kids up for in advance.
We on fire says
As a realtor on the side, I always tell clients don’t rush when buying a house. It’s best to look at the area and go to open houses to get an idea what’s in your budget and the area.
Peter Evering says
Michelle! I must tell you that this article of yours have proven so beneficial to me. I wanted to buy my own house but I was unaware of so many points that should be considered while buying a dream house. Because you cannot have perfect house but certainly the ones you like become perfect for you. Thank you for sharing this.
Helen Martin says
Thank you so much for your kind suggestions. I am very happy here to announce to you that my real estate agent also helped me throughout the home buying process. Also, he helped me to arrange a professional inspector from Prompt Building Inspections.
The home buying process becomes very simple if you get services from the right person.
Once again thanks for the information. Please keep sharing.
Ron Booker says
My daughter and her fiancee are thinking about buying their first house, and we are looking for advice to help her. I liked how you said that one of the most important steps to buying a house is knowing how to set a budget. I will let her know about the benefits of knowing her budget before buying her first house.
Mats Wolff says
Thanks for mentioning making a wish list for what we want in our ideal home. We plan on moving this summer and we think we will live there for at least 10 years. My wife and I will look around for a good realtor to help us find the perfect home.
Taylor Anderson says
My landlord wants to sell her condo and buy a home. I love how you mentioned that she should set a budget before looking at homes. Thanks for the great tips for buying a home.
Joseph Martial says
This is a good read for future home owners. This is a good input to make future homeowners think about the things to consider when buying a new home.
Rebecca Gardner says
I like your tip to think about schools and the area in general to ensure we’ll be happy there for at least five years. My sister plans on finding a real estate agent so she can start looking at single-family homes for herself and her two kids within the next couple of weeks. I’ll send her this article since I think your tips will help her evaluate homes more effectively!
Rachel Frampton says
My uncle is planning to purchase a newly constructed home, which is why he’s currently looking for a real estate company that may help him out. Well, I agree with you that he must check his credit history and score first before making any final decisions. You’re also right about the importance of creating a wish list that he would like his future home to have.
Levi Armstrong says
I like that you said I should determine how long I will live in the new home I’m planning to buy to ensure I choose the right house to purchase. My husband and I plan to purchase a house near a daycare center since we have a toddler. We plan to move to another part of the country when our daughter starts elementary, so we’ll factor that when checking out homes for sale. Thanks.