Buying while still in debt (or without an emergency fund)
Debt and/or the lack of an emergency fund can ruin your home-buying experience quicker than you can say “Broken A/C.” Don’t buy a home until you are out of debt and have 3–6 months of expenses saved for emergencies. Save up a down payment of at least 15% and keep your house payment 25% or less of your take-home pay on a 15-year mortgage. Another option is to buy your home with cash and stay out of debt permanently, and not have to worry about monthly payments!
A home inspection usually costs a few hundred bucks—money well spent if it helps you avoid potential disasters after closing. Your inspection will include a thorough review of the home’s structural elements and electrical, plumbing, heating and cooling systems. The inspector’s report gives you the information you need to decide to buy the home as-is or to negotiate with the seller to fix the problems or reduce the price.
Most real estate agents are friendly and outgoing, so it’s easy to make the mistake of trusting the seller’s agent to help you buy one of their listings. But the fact is, the listing agent works for the seller—that’s who they’re paid to look out for. It is in your best interest to hire an agent whose sole focus is to represent you in the transaction. These agents are often called “buyer’s agents.” A buyer’s agent’s job is to show you properties and help negotiate your contract to make sure you’re getting a good deal. On average, a buyer’s agent saves you 5% on your home purchase. That’s $7,500 on a $150,000 home.