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What’s the worst mistake you can make when you’re looking to buy your first home?
Many first time home buyers are always excited about buying their homes. Sometimes, this excitement is so much that it leads to costly oversight and some of these home buyers end up in the wrong house.
If you’re looking to buy your first home, this article is written just for you. You can avoid the worst mistakes many first time home buyers make and you can actually end up in your dream home at the right location at the right cost.
5 Biggest Mistakes First Time Home Buyers Make And How To Avoid Them
1. Buying a home without considering its resale value
Many first time home buyers make the mistake of buying a home without considering its resale value. If you’re looking to buy your first home, its easy for you to assume that you’ll live in the same home for up to 20 years or even more.
But many home buyers move from their home sooner than they anticipated. People move for several different reasons including job transfers, marriage, climate change, or even crime rate. So if you’re a first time home buyer, you should consider the resale value of whatever home you intend to buy.
When you’re buying your first home, consider properties with broad appeal. Talk to your agent about housing trend in the neighborhood you’re considering and based on that ask him about how the home might be valued in the next two or three years.
If you’re considering a fixer upper, don’t miss this 10 tips about buying the right one and flipping it for cash.
2. Downplaying the expenses you might incur after buying the home
first time home buyers are always interested in mortgage payment and closing costs. But there are several other expenses that are built into home ownership. Before signing any deal, ask the seller for a property expense list. The list will give you a clear idea of how much you should be paying every month. Then consider how much you’ll have to set aside for positive.
Some other expenses such as pest control and landscaping may put a hole in your pocket if you’re not expecting them. You can set aside 1% of the entire home value for maintenance.
3. Skipping the home inspection to save costs
Many first time home buyers assume they’re playing smart by skipping the cost they’ll have to pay an agent to inspect the property they intend to buy. A home inspector often charge a 2 to 4 hours fee to search for red flags that could save the buyer thousands of dollars in renovation costs.
Many home inspectors’ rates start at $450 on average, and that cost differs depending on the home size and how it was built. A first time home buyer may not be aware of the key things to lookout for that could cost a whole lot of money in the next few months or years.
4. Skipping Mortgage Qualification
As a first time home buyer, make sure to get pre-approved for a loan before placing any offer on a home. The reason for this is simple. What you think you can afford and what the bank is willing to lend you may not match up. This often happens when you have a poor credit or an unstable income.
If you place an offer for a home and sign a contract and then discover later that the bank is not willing to lend you the amount you actually need or that the bank is offering you a mortgage with terms and conditions that you find unacceptable, you’ll be wasting the seller’s time, the seller’s agent time and your agent’s time.
That said, you should be aware that after you’ve been pre-approved for a mortgage, your loan could be declined at the last minute, if you make an unexpected move that could alter your credit score such as financing a car purchase.
If your actions cause the deal to fall through, you may lose the several thousand dollars you’ve invested when you signed the contract.
5. Compromising on What You Need
So many first time home buyers compromise on what they actually need in a home in order to cut costs. If you have a family or looking to start one soon, chances are you’ll need a home with at least three bedrooms. Do not settle for a home with two bedrooms in an attempt to cut costs.
If you hate sharing walls with neighbors, do not buy a condo because its cheaper. In the end, chances are you’ll have to make some compromises so you can afford your new home. But don’t make a compromise that will be a major strain, or make you regret buying the home.
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