Common mistake when deciding to buy home in a short time
17/01/2019 10:02 | Source: NDH/CNBC
If you plan to buy a home within the next 1-3 years, be sure that you have prepared a large amount of money including value of the house and costs incurred to avoid the common mistake below.

Along with down payment, home buyers also need to have enough in bank to cover other costs for moving, repairs, and mortgage payments for the first few months. Make sure that these costs won’t drain your emergency fund.

If you are a first-time buyer, the costs may overwhelm you. Therefore, you should be sure that you're in a financially sound place before signing a home purchase contract.

According to Eric Roberge, a CFP and founder of Beyond Your Hammock, the common mistake people make while saving up to buy a home is focusing on only the bare minimum costs.

Common mistake when buying home
To avoid risks, you need to maintain an emergency fund if you plan to buy home in the near
future and your finance is not stable enough

He says to CNBC Make It: “Scraping by is no way to live your life and, although it may feel like it, buying a home will not magically make your life better, Just like anything else, you will get over the new home feeling and sink back into normal life.”

In fact, the expenses don't stop once your name is on the certificate of ownership. Cathy Derus, a CPA and founder of Brightwater Financial, says each year, homeowners should prepare to pay 10 to 20 percent of the home’s price, including both expected costs like mortgage payments, insurance, taxes, utility bills and unexpected costs such as a leaky roof.

In addition, Roberge also warns home buyers against taking unnecessary financial risks to buy a home. The expert advises buyers not to invest money in the stock market to grow it faster if you have a plan for home purchase in the near future. “This may be a smart strategy for someone saving for a home in the next five to 10 years. It's not smart if you would like to buy in the next one to three years,” says Roberge.

To keep life not be disturbed by the home purchase, buyers should maintain an emergency fund that's liquid and accessible and has enough in it to cover living expenses in at least six months.

According to Roberge, even if you feel emotionally ready to take on the responsibility of owning a home, if it means you'd be scraping by, just hold off until you're in a more stable position. “Being smart with your money can look like living in an affordable rental and continuing to save and invest for future goals," he notes.