14 financial tips for homebuyers: What to do before you buy

I always tell clients the one thing they usually miss is building a separate cash buffer for emergencies and early home expenses before they even apply for a mortgage. Most people focus entirely on the down payment and closing costs, then find themselves with almost no liquidity once they have the keys. In reality, the first year of homeownership brings repair costs, higher utilities, council tax adjustments, insurance changes, and dozens of small purchases that add up super fast. One unexpected appliance failure can wipe out whatever thin reserve you have left.

That’s why a dedicated buffer of 3 to 6 months of living costs can change everything. With this, clients make better decisions on which property to buy because they can see clearly how much they need to keep aside. They also feel less pressure during underwriting because a solid reserve strengthens their affordability profile. After closing, that buffer keeps you off credit cards if something breaks or your income dips briefly.

One thing I wish I’d done better was truly understanding my debt-to-income ratio earlier in the game. I knew my credit score mattered, but I didn’t fully grasp how every monthly obligation, car payments, student loans, and credit cards would affect my buying power. If I’d spent six months aggressively paying down some of that debt before seriously house hunting, I would have qualified for better loan terms and had more flexibility in my price range.

The preparation would have benefited me by opening more doors, literally. A lower debt-to-income ratio doesn’t just mean you qualify for a bigger house; it means you have more options, more negotiating power, and less stress when lenders scrutinize your finances. I’ve seen buyers lose out on their dream property because they were maxed out on what they could qualify for, with no room to compete in multiple offer situations.

Working with buyers now, I always encourage people to look at their complete financial picture months before they start touring properties. It’s not about deprivation; it’s about strategy. Small adjustments early on can translate to thousands of dollars in savings over the life of a loan.

The real estate market doesn’t wait for anyone, so being financially prepared means you can act decisively when the right opportunity presents itself. You’re not scrambling to adjust your budget or wondering if you can make the numbers work. You already know you can, and that confidence shows up in how you negotiate and make decisions throughout the entire transaction.

After buying my first fixer and making all the mistakes, I realized that long-term lessons were far worse and more expensive than the immediate cash flow crunch of a good down payment. If I’d had a nest egg — say, 2% of the purchase price — to help me with emergency repairs or critical exterior needs like failing rain gutters and wood rot on the trim, then I could take care of those elements right away. If you brush it off — that $500 gutter repair, say — you’re rolling out the welcome mat for a $5,000 foundation or siding bill in two or three seasons.

One thing I wish I’d done better was honestly assessing my income stability and growth trajectory before buying. When you’re young and ambitious in any career, including real estate, there’s this tendency to assume everything will keep trending upward. But life happens, industries shift, and having a realistic view of your financial floor, not just your ceiling, matters tremendously.

In my years helping clients buy and sell homes across Louisville and Southern Indiana, I’ve learned that the most successful homeowners are those who bought based on their actual income, not their hoped-for income. If I’d really examined my worst-case scenario and best-case scenario before purchasing, I would have made more informed decisions about how much house to buy and how much cushion to maintain.

The benefit during the process would have been clarity and confidence. Instead of stretching to afford something at the top of my range, I might have chosen a home that left more breathing room for life’s uncertainties. In real estate, we talk about being “house poor,” when your home costs consume so much of your income that you can’t enjoy your life. That’s not the dream.

Looking back over a career that’s now included forming a team and growing a business while raising a family with Ashley, I understand that financial preparation isn’t about limiting yourself. It’s about building a foundation that supports everything else you want to do, whether that’s fishing with my dad, golfing with friends, or investing in your children’s future. Smart preparation creates freedom, not restriction.

One thing I wish I had done earlier was fully separating my investment capital from my personal living expenses before buying a home.

As an investor, I understood cash flow in theory, but in practice, having clearer boundaries between personal reserves and property-related funds would have made the process smoother. During the purchase, unexpected costs surfaced: legal fees, minor repairs, furnishing decisions, and timing gaps between payments. Having a clearly defined “home-buying buffer” would have reduced friction and decision fatigue.

That preparation would have benefited me in two ways. First, it would have strengthened my negotiating position, because I wouldn’t have felt pressure around timelines or contingencies. Second, it would have allowed me to evaluate the property more objectively, without mentally weighing every choice against personal liquidity.

For buyers, especially those who also invest, clean financial structure before entering the process creates confidence, flexibility, and better long-term outcomes.

Prior to purchasing a home, I did not properly stress-test my finances beyond the down payment, which I regret. My attention was on the purchase price and getting approved for my mortgage, but I failed to predict how owning a home might change my available cash flow in many scenarios, including increased costs for homeowners insurance, rising property taxes, and unexpected repairs or maintenance.

If I had built a more extensive buffer and modeled these costs before closing, then the entire process would have been significantly less reactive. I would have made confident decisions during the negotiation process and selected a more flexible financing option.

My recommendation would be to view the purchase of your primary residence as a long-term investment and treat its overall cost of ownership as a multi-year proposition as opposed to treating it solely as a transaction. If you plan for full ownership costs for years five through ten (not just year one), you will have more leverage when negotiating with the seller, more security in making your decision to buy today, and you will be able to ‘weather’ any unknown or unexpected changes in immediate cash flow without jeopardizing your overall financial plan.

Early on, I bought a property in cash, assuming the rehab numbers I was given were solid. After closing, the sewer line collapsed and added over $12,000 that wasn’t in my original budget. I had the money, but it wasn’t liquid; I had to pause work while I moved funds around.

What I wish I had done was keep a dedicated “unknowns” fund that was completely separate from purchase and rehab money. If that fund had been in place, the project wouldn’t have stalled, contractors wouldn’t have been delayed, and I wouldn’t have lost momentum on the deal. That preparation would’ve saved time, preserved relationships, and actually protected the property’s value.

In real estate, it’s not the planned costs that hurt you; it’s the ones you didn’t isolate cash for ahead of time.

I would’ve liked to have built a bigger emergency fund beyond the down payment and closing costs before buying my first home. With just enough money to cover the down payment, I was financially strapped when unexpected expenses came calling in my first year of ownership (an appliance-killing new water heater and damage from a leaky roof included). A strong emergency fund of at least six months’ worth of expenses would have been a game-changer that offered me peace of mind (and freedom from leaning on credit cards) for those inevitable homeowner surprises.

I wish I had run a cash flow stress test using a conservative model of my actual manufacturing income cycle to determine what I could afford before I purchased. Modeling my mortgage payment, tax, insurance, maintenance, and furnishing against the slower sales periods would have given me a better upper limit on how much I should pay and potentially allowed me to negotiate a better price. It would have also helped me avoid borrowing money in the first few years of ownership (short-term credit post-closing) and provided the needed funds for inventory, payroll, and business continuity.

I wish I would have documented every single expense for six months with detail to the last dollar, then went shopping for real estate. The majority of home buyers use approximate monthly cost estimates based upon national averages. However, using an approximate amount of money will create blind spots in your financial picture that become apparent once you’ve signed your mortgage and moved into the property. Documenting all of your income and expenses for six months will reveal to you the actual disposable income that you have, and the differences between the expenses that are truly fixed and those that you believe to be a necessity, however, can be adjusted.

Preparing for homeownership helps you determine your spending limits. With that established, you will know when you are spending too little and when you can safely spend more, helping you avoid overextending your home buying power. This also keeps from happening what often happens with new buyers; they qualify for as large of a loan as possible only to then be shocked at the higher than anticipated expenses such as property taxes, utilities and maintenance costs in their monthly expenses.

One thing I wish I had done earlier was separate my personal spending from my home-buying finances at least 6-12 months before applying for a mortgage.

Had I done that, the process would have been much smoother. Keeping cleaner bank statements and reducing discretionary spending would have made underwriting easier, improved my debt-to-income ratio, and helped me feel more confident about what I could truly afford. It also would have reduced stress when lenders asked for documentation, because everything would have been organized and predictable rather than reactive.

If I could revisit my first home purchase, I would approach it with a different assumption: that it might not be permanent. Not because I expected to move quickly, but because treating a major financial decision as flexible leads to better choices.

Many first-time buyers implicitly plan around stability. The home is selected to fit a specific moment in life, with little consideration for how adaptable it will be if circumstances change. In reality, change is common. Careers evolve, household needs shift, and markets move in cycles. Preparing for that uncertainty does not weaken the decision. It improves it.

Buying with a potential exit in mind forces clarity. Location becomes a question of demand depth rather than personal preference. Areas with diverse employment bases, reliable infrastructure, and consistent renter and buyer interest preserve optionality. These locations do not guarantee higher returns, but they reduce the cost of needing flexibility.

The same logic applies to the home itself. Layout matters because it determines who the property works for. Functional floor plans, an extra bedroom, or space that can serve multiple uses appeal to a wider audience. Homes that only work for a narrow lifestyle are harder to adapt, rent, or sell when needs change.

Fixed costs play an outsized role in flexibility. Property taxes, insurance, HOA fees, and maintenance obligations continue regardless of income or market conditions. Lower fixed costs increase resilience. They make holding the property less stressful, renting it more feasible, and selling less time-sensitive.

Resale considerations should be part of the initial analysis. Homes with straightforward layouts and neutral features tend to attract consistent demand over time. This is not about avoiding character or comfort. It is about recognizing that broad appeal protects both value and choice.

This mindset also improves decision-making during the purchase process. Buyers who do not rely on permanence tend to evaluate price, inspections, and long-term costs more objectively. The result is a home that works financially across a wider range of outcomes.

A first home does not need to predict the future accurately. It needs to remain useful when the future changes. Treating it as a flexible asset rather than a fixed endpoint leads to decisions that hold up over time.