How first-time home buyers can avoid overspending in hot market

The housing market is one thing that the pandemic has not slowed down. Studies have shown that since 2021 - despite an increase in median cost - over 60% of homes are sold within 3 weeks of listing. Needless to say, it’s a seller’s market, so first-time buyers should be extra smart. Here are some tips to follow so that you don’t overspend on a home.

Be Realistic

Before you even start shopping for homes, figure out how much you can realistically afford to spend. Once you have a number in mind, get a pre-approval letter from a mortgage lender. Once you know how much you can borrow, aim to spend under that if you can. As Marketwatch suggests, the price of a home is never simply the price of a home. There will be maintenance costs, insurance fees, unexpected repairs needed and more. You don’t want to stretch yourself too thin.

Get Help

Ask your friends and loved ones for a real estate agent recommendation. This person knows the ins and outs of a contract and can help guide you along the way - they are vital to your success in the process. Buying a home without an agent will just add unnecessary stress.

Think of Needs vs Wants

When considering your first home, separate needs and wants. Use your needs as a guide when shopping. Most of the time, “wants” can be satisfied in some other way. Perhaps you need a home near your kids’ school, and want it to have a screened-in porch. Well, you can always add a porch years down the road. You can’t pick your home up and move it closer to the school. Needs first, wants second.

Stay Focused

Don’t let emotions get the best of you. If you don’t get that first house, you’ll get another one. Yes it’s a seller’s market, but there will always be another house. Don’t let your emotions force you into compromising on your carefully-planned budget.

This (adapted) article by Chris O'Shea originally appeared on SavvyMoney blog, and is used by permission.

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