One trial home buyers in Champaign-Urbana IL face, especially first-time home buyers, is figuring out how much money they’re comfortable spending on the purchase of their home…and then sticking to their budget. You may be thinking “Not me! I know what I can afford and I don’t overspend!” And if that’s the case, then great. You can stop reading now 🙂 But like with most situations in life, it’s hard to know how you’ll handle being in this exact situation until you’re in it. And I can tell you from what I’ve witnessed, the temptation of overspending is alive and well. It happens to the best of us.
Let’s pretend the bank pre-approves you for a loan up to $250,000. That’s the MAXIMUM number that the bank is willing to loan to you and that certainly doesn’t mean you have to spend that much. Usually a buyer will agree that it’s a good idea to spend less than that number so that you have a cushion. But once we begin looking at homes, it’s easy to get caught up in the excitement of picking your new home and forget about the financial goals you started with.
So here are two things I recommend doing to help keep you on track as a Champaign-Urbana home buyer:
1. Communicate your budgetary goals to your real estate agent before you begin looking at homes. Let that person know how much you’re comfortable spending so that person can help keep you in check. I’ve talked clients out of looking at homes they requested to see because I felt that it was stretching their financial means a little too thin, and my clients have appreciated this. You can always decide to increase your budget later on in the process and sometimes it really makes sense to do so. But have someone you can talk with to make sure your increase in budget is still in line with your financial capabilities and comfort zone.
2. Look at the home a second time before putting in an offer. The first time you look at a home and fall in love, it’s all about the emotions. You’re probably envisioning where your furniture will go and how much you’ll enjoy entertaining guests in the new space. Between the first showing and a second showing, you’ll have time for a little reality to sink in. You may start thinking about the cost to furnish the place or the burden of the higher property taxes (more expensive home = greater taxes owed) and you’ll be in a better state of mind to make a sound decision.
How much you spend is up to you, and only you can determine what amount you’re comfortable with. So take your time, do your homework, and enlist help. Make sure you have a trusted real estate agent or a level-headed friend to help you keep your goals in check throughout the home buying process, and you’ll be well on your way to responsible homeownership, a truly rewarding venture.