Being a first-time homeowner might be overwhelming and there are many possible mistakes you can make if you don’t think this through.

That’s why the research and planning phase is key and there are certain things you should and shouldn’t do before, during and after purchasing your very first home.

The decision to be a home buyer itself is important. As a lifestyle designer and somebody who wants financial independence, having your own place is key as it will save you a ton of money down the road.

However, while debt is almost never good and even if you are making some money on the side already or have an online business, a mortgage is necessary for first-time homeowners.

Of course, you can then focus on paying it as quickly as you can so you can be mortgage-free and continue your life with a home that no one else owns but you.

Whatever your situation and goals are, you should be smart about your finances and a big decision like buying your first house.

Here are some questions that will help first-time home buyers:

Tips for The First-Time Homeowner

1. Do you really need a big first home?

A common mistake of those owning a home for the first time is going for the bigger place. However, here’s the time to ask yourself whether you really need that.

If you’re single and looking for a place for the next few years but are hoping to find that special someone and move together after that, then you should choose a small first home. The mortgage would also be much easier to handle.

If you’re couple planning to have a kid soon, you also might not necessarily need something too big.

As Michelle from Making Sense of Cents shares in this post,

“When some families buy a home, they don’t think about the total cost of their house. While you may be able to afford the monthly mortgage payment, you may not be able to afford things like insurance, taxes, utilities, etc.

Just because you can pay the monthly house payment doesn’t mean that you can afford everything else that goes with it. There are ongoing costs when buying a house, which is something that many homebuyers forget about.
Banks, many times, approve home loans with monthly mortgage payments around 30% to 35% and sometimes even as high as 50%.

That’s a lot of money. This amount is before taxes as well, which means that your actual monthly home payment would be a significant portion of your take-home income each month. Many who buy at the full approval amount cannot afford their homes due to the fact that it is such a significant percentage of what they earn.”

If you’re in your 20s or 30s and building an online business on the side, ready to hustle for decades to come and live strategically, you’re better off buying a smaller place as a first-time homeowner, paying it off quickly, and moving onto other goals in life.

2. Where do you see yourself 10 years from now?

Assuming you’re not average and want out of the rat race to live a life by design, then you should think long-term.

As a first-time homeowner, this will be your biggest investment, so don’t rush through this.

You shouldn’t have another debt to pay when you apply for a mortgage, as this will worsen your financial situation.

Also, you shouldn’t let current factors in your life dictate your decisions from here on.

Comparing yourself to peers won’t help either as some might want to stay at their day jobs forever, which gives them a sense of security. While others might be okay with renting a home for 5 or even 10 more years.

Ask yourself where you see yourself a decade from now.

Are you the type of person who wants to create passive income streams? If so, then buying a smaller first home, paying it off quickly, moving to another place and then renting this one, might guarantee you recurring income for the rest of your life. How awesome is that!

Of course, it requires smart financial decisions for a long time and many sacrifices along the way. But it can give you freedom like few other things in life.

Consider all this before buying your first home.

3. What other costs will you have right after purchasing the home?

Additional costs related to your first property might be scary. Too many people don’t take them into consideration.

It can even be too late when you realize you can’t actually afford to get a mortgage as a first-time homeowner because of all that you have to pay upfront.

That includes the down payment, taxes, home inspection, estate agent fee, mortgage arrangement cost, insurance and fees, and more.

Then comes the next group of expenses, such as moving from your current place to the next one, home renovations, new furniture, etc.

For example, you might have a garden, which requires extra maintenance and paying for services you might not have used so far.

Wanting a modern kitchen comes at a higher cost too. If that’s your goal, this is recommended for homeowners.

Create a list of extra costs before you make a deal and get a mortgage. Once you speak to a mortgage advisor, you might add new items to the list that you haven’t considered before.

4. What sacrifices are you ready to make to pay off your mortgage?

Housing accounts for almost 40% of the budget of the average American. Do you wanna be one of them?

There are many things you might need to give up to be mortgage-free. If you crave comfort and aren’t okay with saving money, then now might not be the best time to become a first-time homeowner.

However, if you’re ready to take the leap, you should consider the following:

• Stop eating out;
• Give up on travel;
• Cut some monthly expenses;
• Start freelancing to make some money on the side;
• Make paying off your mortgage your priority;
• Stop paying for anything that’s not essential;
• Sell your car;
• Be smart about new purchases.

So that’s what you should answer right before you become a first-time homeowner. What’s your next move gonna be?