You have been dreaming about it for this a long time, and it seems like forever. But at last, you have the means to buy your first home.
When it comes to buying a house, the more you know, the better. Otherwise, costly mistakes are bound to happen. For this reason, we have decided to come up with this no-nonsense list of errors people do when buying a home, especially the first. Are you ready?
Let’s dive in!
Not doing enough research
What happens when you go unarmed into a sea full of sharks? There is a high possibility that they’ll make you their lunchtime snack. In this case, the sharks could be the current home-owner, banks, realtors, neighbors to be, etc. Let’s say that you didn’t inspect the house thoroughly and renovations turn out to be twice the original estimated amount, or worse. Another critical factor that you should consider is studying the neighborhood. It is sad to realize that you will never like the area you ditched yourself into.
How do you avoid that? By doing extensive research about the whole investment. For that, we put down a couple of questions you should ask yourself before plunging into this house hunt.
- What kind of house do I need?
- What is my budget (credit score, pre-approval, additional expenses, closing…)?
- What location do I like?
- Would transportation be an issue?
- Is commuting time reasonable?
- What kind of neighborhood is the most convenient within my budget?
- Expenses that I could come across?
Those are just the overall questions you should ask yourself. You should make customized list that adapts to your needs.
Waiting too much
The real estate market has never-ending shifts that can sometimes affect the whole landscape for those looking to buy their primary home. But still, you should not wait 5 more years because the interest rate increased by one percent(1%).
The only valid reason to refrain from buying a house at the time is not having at least 10% for a down payment. The good news is that there are programs like FHA and Rural USDA that don’t require more than 3% for down payment. Remember that the waiting game is sometimes a gamble. There’s no such thing as “when the time is right.” Waiting for the opportune moment is just a big mistake.
Think about your needs (short-term and long-term) and find the best way to serve them. That way, you’ll make a fulfilling transaction that will be less risky.
Not getting a pre-approval
Yes, you have been banking with your longtime financial institution, and you have an excellent record with them. But do not assume that the will give you any amount that you ask for.
What determines the amount that you qualify for, are things like your debt/income ration, credit history, and work history, among other factors. So, before you begin your house hunt, get pre-approved for a mortgage loan, that way you will know your budget.
Exceeding your budget
All home-buyers know how tempting it can be when you see a more expensive house that has everything you always wanted.
”Oh, that living room is what I’ve been wishing for!”
”That would be my baby’s room, Oh how cute!”
”It feels like it’s begging me to own it”…
Yeah, it could be all that you ever wanted but, can you afford it?. If you can’t, tell yourself that, move on. And even if you can afford it now, think about the future. Will I be able to pay the mortgage if I become disabled or with my retirement pension? Nevertheless, let’s not be pessimistic; you can buy a decent house, enjoy it, and if your financial situation improves, you can buy your dream house and rent or sell the first one.
Settling for renovation
Well, here comes the most common mistake. Home buyers are settling for the cheaper option with the aim of renovating it. They sooth their decision with comments like, ”paint is cheap, and I can do it myself”. But reality dawns on them when they calculate the cost of renovations after buying the property. In the long run, it could be less expensive to buy a home in good shape.
Buying a cheap property
Do you know the difference between a saver and a cheap person? A saver buys something at a lesser price than its value while a cheap person settles for the less expensive alternative, regardless of market value. Home buyers sometimes make the mistake of not analyzing the value of the property before purchase. They later realize the harsh truth behind the property’s price.
When you do some house hunting and like a particular home, check the value price of properties in the same area. That way you can be sure if it’s a fair deal.
Not saving money for after the fact expenses
Once you buy your precious home, you will feel relieved at last. The process is over, it’s time to enjoy the home-ownership. Right? Wrong, the struggle isn’t over. There is still home repairs you might have to do, insurance costs, moving expenses, and a myriad of other miscellaneous fees.
How do you prepare for all this? You set some money aside that will be funding the financial surprises after the home loan’s closure. You can call it, an emergency fund.
Not hiring a realtor and inspector
Maybe your budget is too tight, or perhaps you don’t trust realtors. Either way, you are making a huge mistake. When you want to excel in anything, the best way to go is by learning from the best in the field. Home buying is the same. In fact, involving the perspective of professionals will save you a ton of money.
Fully trusting your realtor
When an agent is showing you a property, your best interests are not always his priority. In fact, they often serve at their client’s(sellers) best interests. This is why it’s vital to get your own agent that will care about your needs as it is their job.
List long much? Well, it’s not long enough, but mastering how you can avoid these mistakes is the first step to a fantastic first home buying experience. Most importantly, exercising patience during this transaction is best for the process.
Happy house hunting and thanks for reading!
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External source: https://www.nerdwallet.com/article/tips-for-first-time-home-buyers