Buying a house cannot be compared to buying other form expensive things like a pair of designer shoes or handbag. Apart from differences relating to cost, the process of purchasing is also not the same, as the former involves a number steps and can take you 30 to 60 days or before moving into the property. It is also hard to recover from the mistake when you overspend on a house than on shoes or bags.
The keys to avoid overspending is to establish a price limit and go below you lender’s preapproved mortgage amount. The sad part is, there are still other factors that can lead you into the trap of overspending or buying a house that is more than what you can afford. Mortgage lenders in Utah share some of the things that can destroy your budget.
Comparing yourself to others
If you have a budget of $250,000 to 270,000 and found out that your friend is buying a $350,000-property, for example, you may start to think about the amenities or number of rooms that they might have. This can then lead to despair or even make you wonder if you should also extend your budget to keep up with your friend.
Falling into this trap can only make you regret you decision, as you have to acknowledge the fact that both of you have different situations. Instead of comparing, it is best to congratulate your friend and focus on your own budget and what it can do for you. You can also think of the other rewards of following your budget like having a healthy savings account or retirement fund.
Not setting your priorities
Buying a house should not start with looking at houses or visiting open houses. Apart from getting preapproved, it is also advisable to set your priorities and determine what you want in a house. This should include the things or amenities that you are willing to pay extra for, as well as the those that you may be willing to compromise on to stick to your budget.
Going into open houses without a clear idea of your budget and want you want can only lead to disappointments or financial disasters in the future. This is mainly because you may start to fall in love in a house and later find out that is over your budget. You may also try to overspend and increase your offer just to get the house.
Engaging in bidding wars
When the house you want to buy receives multiple offer, you might be tempted to compete with others and engage in a bidding war, which includes increasing your initial offer. This is not entirely a bad move, as long as you can stay stick to your budget.
The problem is it is always likely for bidding wars to get out of hand. There is also a possibility that you could end up spending more than what you can afford. This is why it is important to decide in advance on the amount you’re willing to spend on a house. Also, be willing to let go if others make an offer that exceeds your limit.
It takes a lot of will and discipline to stay within your budget. Be sure to approach the process with diligence by determining how much you can spend, refusing to look at properties over your budget, and working with a reliable lender and estate agent.