6 Habits of Frugal People To Use When Buying a House
The busy spring real estate season is right around the corner, and smart homebuyers have already started preparing and researching. But even the most diligent among them face stubbornly high prices and ugly interest rates. To compensate, the wise ones will control every controllable piece of the financial puzzle by embracing the behaviors of thrifty people.
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“By adopting these frugal habits, you can navigate the homebuying process with greater financial awareness, make informed decisions and avoid costly mistakes,” said 15-year industry veteran Linda Schroder, owner of Cash For Houses. “Remember, patience, careful planning and a focus on long-term affordability are key to securing a home that meets your needs and fits your budget.”
Here are some frugal habits you can employ to save money when buying a house.
Ask How Little You Can Possibly Spend, Not How Much You Can Possibly Afford
Frugal people never start by shopping at the top of their budgets. Instead, they enter at the bottom of the price spectrum — and when house hunting, you should, too.
“First and foremost, frugal people approach home buying with a different mindset than the average buyer,” said Brian Davis, real estate investor and founder of SparkRental. “Average people go to their mortgage lender and ask, ‘What’s my loan limit?’ Then they go out and shop for homes right around their uppermost ceiling. Frugal people ask themselves, ‘What’s the least I can spend on housing and still be happy?’ That reframes the house hunt from the upper limit of what you can afford to the lower boundaries of what you need.”
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Set a Realistic Budget and Respect It to the End
Once you identify the boundaries Davis described, do what frugal people do — set a budget and never waver.
“Buying a home is a significant financial commitment, so it’s crucial to establish a realistic budget that aligns with your income, expenses, and debt obligations,” said Schroder. “Don’t get carried away by the excitement of house hunting and stretch your budget beyond what you can comfortably afford. Before diving into the property hunt, carefully analyze your monthly income, existing expenses and any outstanding debts. Once you have a clear picture of your financial standing, determine the maximum amount you can allocate towards mortgage payments, property taxes, homeowners’ insurance, utilities, maintenance and potential renovations.”
Once you establish your range, do what thrifty people do with every purchase they make — hold firm until the right deal comes along.
“Remember, sticking to your budget is essential,” said Schroder. “Resist the temptation to overspend on a house you adore if it exceeds your financial limits. There are plenty of other suitable properties that fit within your budget. Patience and perseverance are key to finding the right home without jeopardizing your financial stability.”
Think About What You’ll Pay After You Pay
Part of the frugal mindset is to look past a thing’s upfront cost and ahead to what you’ll pay to own it over years and decades.
“While the initial purchase price is a significant factor, it’s not the sole determinant of the overall cost of homeownership,” said Schroder. “There are a multitude of ongoing expenses that need to be factored in.”
Before making an offer, Schroder suggests getting a clear picture of your long-term costs by:
Engaging with the local tax assessor to obtain property tax estimates.
Getting homeowner’s insurance quotes.
Researching average utility expenses for similar properties in your area.
Seeking estimates on any renovations you’re considering.
“By understanding these long-term expenses upfront, you can make informed decisions about the affordability of specific homes,” said Schroder. “This will help you avoid unpleasant surprises down the road and ensure you can comfortably manage the ongoing costs of homeownership.”
Where Money Is Involved, Your Impulses Are Your Enemy
Whether it’s Packers season tickets or a pack of gum, penny-pinchers never spend their pennies on a whim — especially when borrowing those pennies at 7.3% interest.
“Buying a house is a major life decision, not a hasty impulse purchase,” said Schroder. “Resist the pressure to rush into a decision based on emotions or the fear of missing out. Take your time, explore various properties, and compare prices carefully. Don’t let a seller’s desperation or your emotional attachment to a particular house sway your judgment. Be objective and analyze each property based on its merits and suitability for your needs. Consider factors like location, layout, size, condition, and proximity to amenities that align with your lifestyle. Avoid letting your emotions cloud your decision-making process. Prioritize logic and financial prudence over immediate gratification.”
Don’t Spring for More Than You Need
Thrifty people don’t necessarily live like paupers, but they also don’t find themselves driving cars with wifi hotspots they never use or buying high-end gaming laptops with features they don’t need. Buying a house is no different. Invest in the level of quality you can afford for the space you need, but leave out the extras — they add up.
“It’s easy to get swept away by the allure of a house with every imaginable luxury feature,” said Schroder. “However, it’s important to remember that these extravagances are not essential for a fulfilling and comfortable homeownership experience. Luxury features can be added later on when your budget permits. For now, concentrate on acquiring a house that meets your core requirements and provides a stable foundation for your future.”
Fees You Didn’t Count On Want To Sneak Up on You. Don’t Let Them.
Frugal people sniff out hidden expenses before they put any money down, especially if they’re putting money down on a house.
“Apart from the upfront purchase price, there are a number of hidden costs that can sneak up on you during the home buying process,” said Schroder. “Closing costs, home inspection fees, appraisal fees and title insurance are just a few examples. These expenses can add up significantly, so it’s crucial to be aware of them and factor them into your overall budget. Obtain estimates for closing costs directly from your lender and research the average cost of home inspections, appraisals, and title insurance in your area. By understanding these hidden expenses upfront, you can avoid unpleasant surprises and ensure you have sufficient funds to cover them.”
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