Buying a Home at the Top of Your Budget? Make These 3 Moves First

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  • Hitting the top of your home-buying budget could lead to a financial crunch once you move in.
  • You can protect yourself by leaving yourself with plenty of savings and carefully planning your near-term renovations.
  • You should also pay close attention to your home inspection in case it raises red flags.

Be sure to check all of these off your list.

Whether you're a first-time home buyer or have owned a home before, you're probably aware that it's important to set a budget before going out and making an offer on a home. That way, you won't go overboard and put yourself at risk of falling behind on your mortgage payments

Now, you might set a budget of, say, $400,000 for home-buying purposes but secretly (or not so secretly) hope you'll pay less. But what if your dream home comes with a $400,000 price tag?

Buying a home at the top of your budget isn't necessarily a poor choice. After all, you're not going over your budget -- you're simply using all of it. But if you're going to go this route, make sure to tackle these key items.

1. Leave yourself with plenty of money for emergencies

When you own a home, a lot of things have the potential to go wrong. Your foundation could start to sink. Termites could take up residence in your walls. Or your heating system might decide to malfunction right in the middle of winter.

That's why it's so important to go into homeownership with a healthy savings account balance -- especially if you're buying a home at the top of your budget that will leave you spending more money on your monthly mortgage payments. If you don't leave yourself with plenty of money to tackle emergencies, you might easily end up in debt -- a fate that the 32% of Americans who couldn't cover a $400 emergency with savings run the risk of.

2. Make sure your home inspection comes back clean

If you're buying a home at the top of your budget, then you probably can't afford to tackle too many major repairs -- at least not initially. That's why it's crucial to pay attention to your home inspection -- and be prepared to back out if any major red flags pop up that your seller refuses to address.

Thankfully, we're past the days of sellers being able to get away with not addressing issues. That was common in 2021 when buyer demand was sky-high, but it's less common today. But if you happen to be working with a seller who won't budge, you may need to walk away.

3. Budget out all of your immediate renovations

Even if you're buying a home in fairly good condition, there are probably some smaller projects you'll want to tackle as soon as you move in. If you're buying a home at the top of your budget, map out the costs of these projects thoroughly and prioritize them in order of importance. You may not have the financial leeway to tackle all of them at once, so you'll need to put your limited funds to good use.

There's nothing wrong with buying a home at the top of your budget. It's going beyond that point that's a risk. But still, you may have less financial flexibility if you're buying at the top of your budget, so be mindful of these key moves as you go about the process of finalizing that home purchase.

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