When purchasing a home you want to make sure you can stay financially strong afterwards so that you can still save for your second largest financial investment: your retirement. Avoid these 5 biggest home buying mistakes that might sabotage your retirement goals.
1. Skipping on the home inspection
Dishing out a few hundred dollars to know whether your house is going to be a potential money pit is worth it. If you’re not having to make repairs all the time, you’ll be able to funnel that money elsewhere, like into your retirement accounts.
2. Buying too much house
Just because you want your dream house doesn’t mean you should buy it at the expense of other finances like your emergency fund, and of course, your retirement fund. The lender may say you can buy a million dollar house, but you need to know how much money you’re comfortable with ahead of time so you’re still able to save the amount you want for your golden years.
3. Using your retirement account for a down payment
If you’re considering tapping into any of your retirement funds to pay for your home, you need to really evaluate the pros and cons.
If you’re only a few years away from retirement, you may want to look into other options for a down payment. If you’re young, and have time to reinvest in your retirement, then this may be a viable option. Just consider all of your options closely first.
4. Blowing through a set budget
You set a budget before you house hunt for a reason—you’re still thinking logically.
If you find a house you really like, but it’s out of your price range, you may be tempted to think of ways you can afford it. Don’t do that. You set a budget so you could feel comfortable with the payment while keeping your other financial goals on track. If you sway from this budget just because of your emotions, you’re potentially sabotaging future goals.
5. Thinking of only cost to buy
Buying a house isn’t just about the purchase price. You’ll have to consider closing costs as well, but more importantly, the cost of owning a home in general.
The utilities you weren’t paying for before in your apartment, such as water and trash removal, are yours to bear. New furniture or updated window treatments can cost a pretty penny as well and add up fast. Plus, when something breaks, you’ll have to find the money and the time to fix it yourself or pay someone to come in and fix it.
Factor these costs in when setting your budget so you can feel comfortable paying for your home while saving for retirement.
To wait, or not to wait
Any time you’re looking to purchase a house, whether it’s now or in the future, you have to ask yourself if you’re truly ready, or if another part of your finances, like saving for your retirement, will struggle because of this decision. If it will, you may want to wait a few years so you can save up some money for a larger down payment – to buy the home of your dreams.