Buying a new home or a new-to-you home can be a daunting and stressful journey. But it should be fun also! I am still young and just turned 20 years old, but I live with my sister and she has her own house. She bought her house when she was 20 years old and I have learned a lot about the home buying process from her.
What if you find the home of your dreams, but find out that you need your cash for something else, or that you don't have enough for a down payment? There are such things as no deposit home loans which can be very helpful. However, it is up to you to how much that you want to put down. Some people dream of the day that they can buy a house with cash or completely pay off their house. You should analyze your situation and see what is best for you.
My sister bought her house with little down (she got an FHA mortgage). She doesn't regret her choice because they got the home at a very low price and saw value in putting a little money down so that they could work on other financial goals.
Purchase less than what you are approved for
My sister and her fiance were approved for around $200,000 for their first house, which was around 4 or 5 years ago. They were 20 years old and this seemed like a ton since they made hardly any money then. They were shocked and looked at one house that was around this price range, but then they realized that this was a bad idea as they wanted to be more comfortable with their bills.
Also, something that their real estate agent told them, is to not show the seller how much you are pre-approved for. They showed their real estate agent their real pre-approval amount, and the agent said that when this happens, it can not be good. She said that if some sellers can see what you can actually “afford,” then they know how flexible that you can be with your pricing and negotiating. You can get your mortgage lender to lower the amount on the piece of paper and this is what my sister and her fiance did. They asked their lender to say that their pre-approved amount was $150,000 (everyone, please keep in mind that we live in the Midwest and housing is cheaper here).
Make a list of what you want
Buying a house can be a long process. You should make a pros and cons list of what you want in a house. Maybe a fenced in yard is a MUST. Maybe you want more than 3 bedrooms. You should list this out and make sure that you and your partner are on the same page.
Figure out the whole cost
The cost of a house has multiple parts to it. You want to factor in home insurance, the actual mortgage, property taxes, and maintenance costs. Will you mow the lawn yourselves? What will utility costs be?