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The conventional wisdom of the past told soon to be first time homebuyers that they should stretch their finances to purchase as much house as they could afford to prevent unhappiness with the home and desire to relocate after a few years.  This advice was mostly based on the belief that salaries would continue to rise as long as the person was willing to work hard and that housing prices could never go down.  After the housing market collapse of 2008, many experts are now giving different advice based on new market realities.  Here are a few of the expert’s new rules for buying a new home.

Put Down A Hefty Down Payment
Banks used to require a person interested in purchasing a home to pay a down payment of 20% or more of the purchase price of the home before they would approve them for the mortgage loan.  As the frenzied housing market heated up, more and more lenders lowered or completely eliminated the down payment requirement, which resulted in many homeowners owing more than their homes were worth when housing prices dropped, limiting their ability to refinance or sell their home if they got into financial trouble.  The banks and lenders are beginning to realize how important the down payment requirements for a mortgage loan can be and are once again requiring hefty down payments from people seeking to purchase their first home.

Carefully Calculate Your Expenses
It is very important for a person interested in purchasing a new home to carefully calculate their income and expenses to determine how much home they can afford to buy.  The cost of a mortgage payment, homeowner’s insurance, and property taxes should not exceed 35% of the household’s after-tax income.  The cost of maintaining and repairing the home should be included in the calculations as well, with the average cost of maintaining a home ranging between 3% and 5% of the value of the home.  By carefully calculating how much the home will cost on a monthly and annual basis, the person will be better able to make an informed decision on an acceptable price range for the home.

Plan On Staying For A While
Some people purchase a home with the anticipation of upgrading to a bigger home or moving out of the area within a couple of years.  This will virtually guarantee that the homeowner will lose a great deal of money on the deal, especially considering the high costs of buying and selling a home.  Taking the time to find a home that the homeowner will be willing to stay in for 8 years or more will save the homeowner tens of thousands of dollars in loan origination, closing, transport, and moving costs.