Buy a home that comfortably allows you to accomplish your other
financial goals. Understand how the proposed home purchase fits
into and affects your existing financial situation and goals, especially
saving for retirement. Get your personal finances in order before
you buy. You should do your saving, investment, and insurance plans
before you buy.
Mortgage lenders and real estate agents can't tell you how much
you can afford to borrow. They can only tell you the maximum that
you're eligible to borrow.
Consider renting if you think you'll soon need to move. Given
all the costs associated with buying and then selling a home,
if you don't expect to hold on to your home for at least three
(and preferably five) years, you could very well lose money.
Have the courage to be a contrarian. The best time to buy is usually
at the bottom of a real estate cycle when no one else thinks it's
a good time to buy. Compare the monthly costs of renting a home
to buying it to see whether buying offers a good value.
You can easily save thousands of dollars by shopping around for
a good mortgage. Money is a commodity just like toasters and toilet
paper.
Choose a mortgage that fits your needs and ability to accept risk.
Don't take an adjustable-rate mortgage unless you can afford the
maximum possible monthly payment and the risk of fluctuating payments.
What you don't know is usually what gets you into trouble. Real
estate is a team sport. Put the right players on your team and
you greatly reduce the likelihood of problems with your purchase.
Remember that real estate agents, mortgage brokers, and other
players only get paid if you buy, and they generally get paid
more the more you spend on a home. To protect yourself against
these conflicts of interest, get your financial house in order
before you start working with these players.
Never buy a pig in a poke. Don't try to save money by skipping
inspections. Have the home thoroughly inspected before you buy
it. If in doubt, reinspect.
Don't let unexpected closing costs sabotage you. Ensure that you
have enough cash to buy the house by estimating in advance all
the costs you must pay at the time of closing, including moving
expenses, insurance premiums, loan fees, and property taxes.
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Eric Tyson, MBA, is a financial counselor, syndicated columnist
and author of five best-selling books including Home Buying for
Dummies (co-author), Investing for Dummies and Personal Finance
for Dummies. His work has been praised and featured in hundreds
of publications including Newsweek, the Los Angeles Times, the
Wall Street Journal, Kiplingers, and on PBS, ABC, the NBC Today
Show, CNN, CNBC, CBS and National Public Radio.
Ray Brown is a 25-plus year veteran of the residential real estate
profession. He wrote a syndicated column and currently hosts a
weekly radio program, "Ray Brown on Real Estate." He
has appeared on CNN, NBC, CBS, and in the Wall Street Journal
and Time magazine.
