5 Tips for Saving Money (and Pain) Buying Your First House

I had just signed a contract with the NFL and wanted to own the American Dream: I wanted to buy a house. Then the bank and my realtor went crazy on me.

Owning a home can be the most satisfying part of the American Dream. And it can be the most devastating financial mistake of your life.

Here are five tips that got me saving money and a few headaches on my first home.

1. Know: How Will You Pay It Off?

The first thing to do when thinking about buying a house is to answer the question: how you will pay it off? Yes, think about paying off this house from the start. It’s not about living a loan—that mentality can bite you. You want to own your house.

A friend of mine bought a first house that was fairly large and he was okay with the payment at the time. When I asked him, “Did you multiply that payment out 30 years? You know, payment times 12 months times 30 years?”

He looked at the “how much” he would pay by the end of it and his mouth fell open. “That’s more than twice as much as the price tag!!” he said. It usually is. Overpaying the principal on your mortgage, even just a little each month, can save you tens of thousands of dollars in the end.

To save money, first and foremost think about, understand and have a plan for paying off that house. How can you get from a house you can “afford” to a house you will own? Those are two very different things.

2. Don’t Listen to the Bank… or the Realtor

As a rookie in the NFL with a signed contract, my bank said I could buy a house that was way beyond what any normal first home would be. My realtor suggested a $720,000 place with a four-car garage (I only owned one car), five bedrooms (no roommates, no wife, no kids), and an office (definitely no business).

The second strategy that helped me truly afford my first house was that I did not listen to what the bank told me I could spend.

There are many problems with the bank’s number. For one (and they don’t always mention this), it’s a maximum amount. The bank says you can afford it based on a lot of assumptions they are making, which may or may not be true for you. For one, that number is based on your current income, which can change.

Do not max out your house payment. Buying something smaller can protect you from future failure and stress.

Banks want to sell you a dream when it comes to what you can buy. They make money on the interest, so they want you to take out the biggest mortgage. Your realtor makes money on the deal and wants you to spend the most. Don’t.

That $720,000 house was a house I didn’t buy. Thank God I went back to my two-bedroom apartment and realized I’m pretty happy with two bedrooms. Buy only what you need, not what you can.

3. Start with a Starter

The third thing I did to come out well was to buy a smaller house than I needed. You really do need a starter home, especially if you’ve been living at home or in an apartment.

Here is what you don’t know yet if you haven’t owned a house: you don’t know what you don’t know.

You don’t know what you really need or even want. You don’t know what matters, until you move in and get the hang of home ownership.

There will be surprises. My family member bought their dream home, with a main-floor master bedroom. It had the backyard they thought they always wanted. After moving in, however, they found out they can’t sleep at night because it’s next to a major roadway and the window frames were made of aluminum, which carries the sound right in. How could they possibly know what aluminum windows sound like at night, when they were walking through on a quiet Sunday afternoon and seeing their dream house?

A starter house means it’s smaller than you need so you can learn homeowner lessons and make your second house your dream home. How often do you need to mow the lawn? How many sprinklers do you need? How much space you really need in a garage or basement? How much of your space is going unused or accumulating clutter?

Learn, but learn small. Learning big costs you big money, creates stress and causes grief. Learning small is a great way to ease into owning a home while giving you the opportunity to save and build future wealth.

RELATED: 10 Smart Money Moves that Saved My…Assets

4. Create a Purpose for Every Space

Before you move in, set a purpose for every space in that house. Even in my starter home, which I thought I bought too small, I didn’t use some of the space.

As a young single professional, I had rooms for my family when they visited, which was maybe a total of 20 days a year. That’s a misuse of space.

I had a seating area with no seats because I didn’t have any friends who sat away from a TV. I wasn’t hosting tea parties. I didn’t know what I was doing.

In my second house, I wasted less space. I got to build out a basement the way I wanted it for the space I would use.

When you’re looking at your first house, have a purpose for every space that you see. Is your computer going to go there? Is your office going to be here? Where will your couch fit? Make sure you will fill your space before you buy your house. No point in buying space you don’t need, is there?

5. Invest in a Good School District

Lastly, if you can, buy in a good school district. Even if it’s your starter home, your first house, the resale value is greater in better school districts. And who knows?

I have friends who bought half a duplex, with a nice one-car garage and no yard to maintain (time-saving). Then they had their first kid. Not only did they need to move, but they wanted to relocate to a good school district. Give yourself some flexibility by buying in a good school district.

RELATED: Why Athletes Go Broke and How to Avoid It Yourself

Imagine yourself in your starter home that you bought small. You have found a purpose for every space and are learning the ropes of homeownership, including what you really want in your space. After a few years, you can sell to make a profit (hopefully) and buy the house of your dreams.

You don’t know what you don’t know. Ask anyone who owns their home and chances are it’s not their first. Any successful wealthy person you know probably had a starter house before they bought the house they live in.

The only way you can find out what you really want is through a starter home. Save your money and learn what you really want so you can be happy in the long run.

This article originally published on my blog. (Here: https://www.ryanharris68.com/5-tips-saving-money-pain-buying-first-house/)