Make a list of  things to know and do….

Decide how much you can comfortably afford for a mortgage… and don’t budge over that!  A down payment of 20% is best because anything less than that means you’ll pay mortgage insurance every month.  There will be added expenses at the closing, so have extra money set aside for lawyer, closing costs, registering the deed etc…. approximately $3,000 – $5,000.

Compare mortgage lenders and find one you trust.  Get a pre-approval letter from the lender and have it with you when you go to open houses….do not give the letter to anyone, just show it to the real estate agent selling the home you’re interested in.  It shows that you are a serious buyer. The lender will often say you can afford more (which is good for them), but stay within your budget so you won’t find yourself house poor down the road, and then lose it all.

Don’t buy too much house.  Think of your needs.  Children/no children, single/married, etc.  Think at least 5 years ahead, and what you think you’ll need then.  You may want a spare bedroom for an office or visitors. You may have to give it up if there are children in your plans.  So think ahead. But don’t buy too big if you’re not sure. An extra bedroom is always good and can be used for a den or office or guests. But too much house is what you’re paying for in your mortgage and might be out of your budget range.

And remember to have some money set aside for a lawnmower, snowblower, etc.  Upkeep of the outside is not only necessary, but needs some equipment to do so. You may also want to redecorate some, so having the money set aside is wise.

If you’ve decided on a condo/townhouse the same 20%, closing costs and how big a place you think you’d need holds true.  Instead of your own outdoor equipment, there will be condo fees which will cover outdoor maintenance and some other costs depending on the condo association rules.  If a large issue has arisen (a roof, heating equipment etc), sometimes there’d be an assessment fee to pay which is shared among the owners, unless there is enough money set aside by the association trustees to do this.  Condos aren’t for everyone.  But if you’re not one for outside upkeep, or if you travel a lot for work and can’t keep an eye on the place as you’d like, then this may be the choice for you.

Either way, single home, or condo/townhouse, go over your budget very carefully.  And no matter the figure the mortgage lender ‘says’ you can afford, it’s you who pays the bills when they come due.  So stick to your figure as the very top of your price range.  Because if your mortgage is higher than you can afford (even if only 3-4 months out of the year, you will get into a financial hole…. one you may not recover from…… so, don’t become house poor.

Remember, stay within your budget, think of the area you’d like (and why), and although plans can and do change, plan for at least 5 years down the road to figure how much house you’ll need.

Doing these things will be less stressful during an exciting yet stressful time.

Happy hunting!