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We all know home is where the heart is. And nothing stirs up feelings quite like buying a home.
So we thought we’d bring back an era when love, heartache and hair gel ruled the airwaves and give some of Dave’s best homebuying advice its own soundtrack.
That’s right. We’re taking it to the ’90s and talking boy band music. Here’s how to buy a home you love without busting your budget.
Break Free From Debt
Theme Song: “Bye Bye Bye” by ’N Sync
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Okay, so technically this song came out in January 2000. But if debt’s got you like a puppet on a string, there’s no better ditty to inspire you to break free.
Why’s that so important? Because debt snatches up your income—and that makes it hard to save for a home. Just ask Gen Y. According to the National Association of Realtors, more than half of millennials who who had trouble saving up a down payment thanked student loans for the struggle.
It’s time to tell debt you’ve had enough! Use the debt snowball method to cut the cord one debt at a time, working your way up from smallest to biggest. The more income you set free now, the more you can put toward your dream home!
Get Your Money in Order
Theme Song: “Step by Step” by New Kids on the Block
Saving up for a home doesn’t happen overnight. It’s a process that takes time and patience. So how do you keep the momentum going? Take a note from NKOTB and break it down into steps.
- Step 1: Pile up three to six months of expenses in an emergency fund so an unexpected disaster doesn’t leave you broke.
- Step 2: Save your down payment. Dave recommends putting at least 10% down, but 20% is even better because you’ll avoid paying private mortgage insurance (PMI). Want to be like Dave? Keep saving until you can put 100% down and pay cash for your home!
- Step 3: Throw extra cash into your home fund to cover closing costs and moving expenses. According to Zillow, buyers typically pay 2–5% of a home’s purchase price in closing costs.
If you really want to show sellers you’re serious, go the extra mile by getting preapproved for a mortgage. Preapproval goes beyond prequalification and means you meet all the lender’s requirements for a specific loan amount.
Don’t Let Emotions Drive Your Decision
It’s easy to get swept off your feet by a place that makes you swoon. Next thing you know, you’re going way over budget to make it yours.
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Then reality sets in. And no matter how hard you wish, you can’t turn back time.
Spend too much money on a home now, and your home will spend the next few years toying with your emotions. You’ve worked too hard to let that happen!
Spend too much money on a home now, and it could toy with your emotions later.
You know you’ve found a home that will be true to you when:
- It’s affordable. That means your mortgage payments are no more than 25% of your monthly take-home pay on a 15-year fixed-rate mortgage.
- It’s not a money pit. A qualified home inspector can bring underlying issues to the surface so you can decide if your budget can handle the necessary repairs before you sign on the dotted line.
- It’s got good resale value. You and your home most likely won’t be together forever. That’s why it’s important to snag a home that will continue to increase in value. A good rule of thumb is to buy the cheapest home in the best neighborhood you can afford.
Set Yourself Up for Success
Theme Song: “I Will Come to You” by Hanson
There’s nothing simple about a home purchase. When you get overwhelmed, you’ll want an expert to guide you through the rough patches. That’s where an experienced buyer’s agent comes in handy.
A buyer’s agent is committed to your best interest and, in most cases, doesn’t cost you a penny since sellers typically cover agent commissions. The right pro anticipates your needs and keeps you focused on your goal: buying a home you love at a price you can afford.
Looking for an agent you can trust to be by your side come what may? We can connect you with the top agents in your area who Dave recommends.