Real Estate Search Direct

In these troubled times, buying a home is more complicated than ever. So where do you start when buying a house?

Homer Buyer was eager to begin his search for a home.  He had started planning to buy a home while he was still in graduate school. Now that he had a job and a decent income, he wanted to be a homeowner.

Homer started his search by looking in the newspaper classified ads and searching online for homes for sale. Homer saw many homes that looked interesting to him. He was judging mostly by location and appearance.

Homer had no idea how much room he needed or what amenities he needed. He had never bought a home before and he hadn’t really thought about what would be involved.

Homer was quickly overwhelmed by all the choices to sort through: Mobile Homes, Condominiums, Town Houses, Single Family Residence, Single Family Attached, Co-op. This was just the broadest of classifications. There were multitudes of options within each of these types.

There were houses with anywhere from 0 bedrooms to 5 bedrooms and 1 bathroom to 6.5 bathrooms. “What the heck is half a bathroom anyways?” Homer wondered?

There were some with a carport and others with 3 car garage. Air conditioning, central heating, swimming pool, basement… The list went on and on.

Homer wondered how he would ever figure out what property to buy. Then there was the matter of price. Homer knew how much he was paying for rent, should he use this amount to figure out what he could afford to buy? How did it relate to a house payment?

Homer realized he was in over his head. He called a real estate agent for help, but he didn’t have any answers to all the questions the agent asked about what he was looking for.

The agent asked “Ok, I see you don’t know what you want, so let’s start with how much can you afford?”  The agent asked if he had a pre-approval letter from a lender.  Homer thought maybe that was where he should start, so he called his bank.

The loan officer at the bank also had a list of questions that Homer couldn’t answer. What was his credit score? How much revolving debt did he owe? How much did he want to borrow? How much could he put down?

Homer soon realized he needed to do some preparation before he started considering what house to buy or what loan to get. He needed a plan.

When Homer started thinking about his financial situation, he realized that one thing they never taught him in all his years in school was how to manage his money.

He needed to start with the very basic concepts. He needed a budget.

With a budget Homer would accomplish several things

• Determine what his current spending habits were
• See what money he was wasting
• Identify ways he could save money
• Allocate part of his income to save for a down payment
• Calculate how much he could afford for a monthly house payment
• Plan for additional expenses of home ownership – property tax, insurance, homeowners association, etc.
• Plan for future financial goals/expenses – marriage, children, vacations, etc.

Homer knew that he would be making one of the biggest financial decisions in his life when buying a house, so he had to make sure he was making a good decision.  With all the foreclosures he was seeing in the news, he didn’t want to become another statistic.

Homer had to learn to manage his personal finances before he took on the responsibilities of homeownership.

To start managing your own personal finances you should start by creating a budget.  Identify each income stream.  Next list each category of spending and allocate a portion of your income to that category.  Set goals for saving and include them as well.

Once you have identified how you plan to spend, save or invest your money, you must develop a system to track your spending.  Without a proper system, creating a budget and tracking your expenses can be a real challenge.

A good starting place for developing a budgeting system is a personal budgeting software. Money Tree is an excellent resource for developing your budget, tracking your expenses and achieving your financial goals.

This software simplifies the process of creating a budget to allow you to take control of your finances.  To learn more about Money Tree budgeting software and take control of your finances click here.

Allen Davis
RealEstateSearchDirect.com