Buying a Home on a Budget? 7 Must-Ask Questions

Posted by Unity Home Group® on Thursday, August 3rd, 2017 at 7:42am.

Things to Consider When Buying a Home on a BudgetEven with a tight budget, it's often still possible to buy a home. There may have to be some concessions made along the way, but that doesn't mean your new Palmer home has to be too small for your needs or in poor condition, either.

With some careful thought and planning, it's often possible to find a home that may be a great choice, even if the budget for buying a house is a little on the smaller side. Before you try to buy a new home, here are some questions to ask.

1. How Much Repair and Remodel Work Does it Need?

Most houses, other than new construction, probably need some kind of repair or remodel work to make them feel like home. And for buyers with a limited budget, that may be even more true. Even so, the home should be solid and safe to live in. So remember that cosmetic upgrades, such as paint, carpet and flooring can be done over time, but the house has to be generally in a livable condition and not in need of major repairs that may eat into your savings.

2. What did the Home Inspection Show?

A home inspector can provide a lot of insight into buying a home, and even with a tight budget the inspection process is still important. While homes should pass the initial eye-test, an home inspection can help any buyer determine if there are big issues with the home and may provide some negotiating room to get those problems fixed or have the seller reduce the price.

3. Is Saving up and Paying Cash Really Better?

In a sense, offering all cash for a home may mean getting more for your money. Additionally, most sellers like all cash offers. However, having the cash to buy a home, doesn't mean you necessarily should. Most homes today are still financed with a mortgage. And with low interest rates, this certainly may be a better route than paying all cash for a home. Should you be buying a home with a mortgage, and on a limited budget, make sure you have a down payment, good work history, and other things that mortgage companies may look for. Also, consider getting prequalified for a mortgage, as this will make an offer all that much stronger.

Of course, all financial situations are unique, so speaking with a financial professional or lender about the pros and cons can be very beneficial when making decisions.

4. Have you Checked Your Credit Report?

Your credit rating matters when trying to finance a home. In most cases, the higher the score and the lower the number of negative items on the report, the better. Checking your credit report before trying to buy a home is a good idea, because many problems can be caught and fixed before applying for a mortgage. Credit reporting agencies sometimes make mistakes, so keep an eye out for anything that may not seem accurate.

5. Are the Taxes and Insurance Premiums High?

High insurance premiums and high taxes are things you definitely want to avoid when buying on a budget. Determining what monthly payments you are willing to make in advance can help make your search more efficient. Consider the locations where there are homes you like, and compare the insurance costs and tax rates to help make the best, most informed choice.

6. Is the Home Insulated Properly?

Good insulation matters. It keeps the house feeling more comfortable, and can affect the heating and cooling bill quite a bit. Even a small difference in insulation can lead to large savings over time. With that in mind, good insulation is one of the things that can help you stay on a tight budget and still enjoy your home.

7. What are the Monthly Utilities?

Utilities are a part of life—especially when you own a home. But keeping utilities as low as possible is important. Generally, the larger the house the larger the utility bills, so consider the size of the home if the budget is tight.

Overall, the dream of buying a home is actually more attainable for many than they might think. By asking these 7 questions, you can prepare for your search with confidence.

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