How do you buy a house today and not become house poor? Follow this advice.
“House poor” is a popular term being thrown about in the real estate world and among homeowners today. In an uncertain economy, finding affordable housing has been a problem, including in Maryland, for quite some time. Although there is much debate about how high or low interest rates, government decisions, and buying habits affect the disparity in income and housing costs, the main goal for all homebuyers is to avoid becoming house poor.
Get Pre-Qualified for a Mortgage
The first step might seem obvious, but if you are new to buying a home, you will need to get pre-qualified for a mortgage to see how much the bank is willing to lend you. It will determine the most expensive house you can afford. You can get pre-qualified through a real estate site, your bank, or a real estate agency.
Buy Below Your Means with a Significant Downpayment
Even if you qualify to buy a house at a certain price, it doesn’t mean you have to buy at that price. That price point could mean what you can afford to buy if you empty out your savings entirely, leaving you broke. Buy below your means if possible, with enough room for savings leftover. While the required downpayment is 20% of the total mortgage, aim to save up as much as you can. Have the least amount of debt possible.
Understand All the Costs in Buying a Home
If you are unfamiliar with buying a home, be aware of all the extra costs that come with a mortgage. For example, you have the real estate agent’s fees, the closing costs, property taxes, and home insurance. Even though a home is listed for sale at a certain price, you will probably pay more if you don’t negotiate a price significantly below it.
Have Maintenance and Emergency Funds
Set aside enough savings in your bank account to live for 3-6 months at all times. With a mortgage, you should also build an emergency fund should something major happen in your home. Anything can happen along with ongoing maintenance, and you should have savings ready even with homeowner insurance.
Find Ways to Save and Increase Your Income
How can you get and preserve the downpayment, emergency fund, and home maintenance fund you need before buying a home within your means? Smart financial decisions will help you out. Practice frugality and find creative ways to increase your income, whether it be asking for a raise or starting a side hustle.
You don’t have to be house poor! If you need a reliable Maryland realtor, see how Clagett Enterprises can help.
Trust the Professionals at Clagett Enterprises for Your Realty Needs
If you’re looking for an experienced property management company, the perfect realtor for your property, or a professional to assist you during your purchase of any home, you can rely on Clagett Enterprises. Clagett Enterprises is a full-service real estate company with almost 30 years of experience in the Frederick and Western Maryland area. For assistance with commercial sales, leasing, management, and development and consulting, contact us online or give us a call at 301-665-6009. To meet our team and see some of our beautiful homes, follow us on Facebook and Linkedin.