Five Tips for Buying a House Within Your Budget

It's exciting to be in a position to buy a house, and it's a milestone for most people, but it can also be the most stressful thing you ever do, especially when it comes to managing your budget. The housing market is huge, offering you a wide range of options from start to homes to luxury homes, with every imaginable feature.

You can build, you can buy. You can choose to buy a small tiny home, or you can build a house in the sticks. While it's easy to get caught up in the excitement of house hunting, staying within your budget is important if you want to insure long term financial comfort. Just because you can afford a house that's worth $1,000,000 doesn't necessarily mean you should. So let's take a look at 5 simple tips to help you to buy the right house without stretching your finances too thin.

1. Know what you can truly afford. Take an honest look at your finances before you do anything. This should include your income, your savings, your debts and monthly expenses. The general rule of thumb is that your mortgage payment shouldn't exceed around 25 to 30% of your monthly income. You need online mortgage calculators to get an idea of what you can afford, but remember to factor in property taxes, insurance, maintenance, and utilities.
2. Don't shop until you've been pre approved. Getting pre approved for a mortgage before house hunting gives you a clear budget to work with and makes you more attractive to sellers. A pre approval letter from a lender shows sellers that you're serious and you're financially ready to buy now. In this process, the lender will review your income, credit score and debts to determine how much they're willing to lend to you. Having this information early on helps you to stay focused on houses within your price range.
3. Separate your needs from your wants. When you're shopping for a home, it's very easy to be tempted by extras like high end finishes, large yards, or extra rooms you may not really need. Make a list of the things that are non-negotiable, like the number of bedrooms or proximity to work or school. Then make a list of features that would be nice to have, such as solar panels on the roof or a nice shower.
4. Be open to compromise. Sometimes the perfect home that fits every item on your wish list won't exist within your budget. Being willing to make small compromises, like a slightly smaller house or one in a nearby neighborhood can help. Keeping an open mind can lead you to bigger opportunities that you may have overlooked.
5. Think in the long term. Your home is a smart investment, not just a comfortable place to live, so consider your future plans. Whether you might be looking to expand your family or even relocate or sell in a few years, that should be a factor in your decision making process.