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Buying a Home? 5 Helpful Tips When You’re Home Shopping on a Budget

Story Highlights

  • #1 - Reduce your debt
  • #2 - Build good credit
  • #3 - Show your ability to save
  • #4 - Set a price limit and stick to it
  • #5 - Bid on homes that are not selling

A home is probably one of the biggest investments that you will ever make in your life, so it is understandable that you might be feeling a bit nervous about it.

A huge percentage of your income will go towards paying off your bond each and every month for the next 20-30 years, which is why it is important to know what you can and cannot afford.

Shopping for a home is an art that you will get better at as time passes but in order to help you as a first-time home buyer, here are 5 great tips that you can use:

#1 – Reduce your debt

The first thing that you have to do is to lower your debt. It doesn’t matter what type of debt it is, the less you have of it, the better.

Try and pay back those student loans a bit faster if it is possible and limit the spending on your credit card. Start by paying off the debt that has the highest interest rates, so that you have more money during the month to pay off the next set of debts.

As soon as your debts have been paid off, you might be able to afford a (bigger) home.

#2 – Build good credit

Even though you should try to pay off your debts as soon as possible, you also can’t avoid building credit.

Your lender will definitely check your credit score and a non-existent credit history is the same as having a bad one. You will get excellent interest rates if you have a healthy credit score.

If you need to bring up your credit score, you can do something small like take out a cellphone contract. If you are wary, you can speak to your bank manager and get professional advice.

#3 – Show your ability to save

Many lenders want a deposit before they approve the loan, so it would be a good idea for you to start saving before you even start looking for homes or home loans.

You can decide on a reasonable amount that you can save each month or each week until you have built up a big enough savings account to put down as a deposit.

Let the money accumulate in a savings account so that it can increase by means of interest and when you have found your dream home, you won’t be scurrying around, trying to get a deposit together.

#4 – Set a price limit and stick to it

Before you start looking for a house or applying for a loan, get pre-approved first.

A pre-approval will determine exactly how much you can afford when you decide to purchase a house.

Determine the amenities that you want to have in your home and decide whether you want to pay extra for it.

Once you have a price limit, you can use a mortgage calculator to see what the monthly repayment on a bond of that price will be. This way you can ensure that the payments will be manageable.

#5 – Bid on homes that are not selling

This might go against everything you have ever read, but just because a home isn’t selling, doesn’t mean that there is something wrong with it.

It might be sitting dormant because the market is saturated at that point in time or it has an unpleasant curb appeal.

This is something that you can work on and fix once you buy the house. You can find good deals when looking at these houses and you might even get the owner to lower the price a bit.

Buying a home can be both exciting and stressful, but with these few tips, you’ll be able to enjoy the entire journey!

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