Whether you're a first-time homeowner or someone who has lived in multiple houses, you’ll want to avoid some costly financial mistakes. Following are some common missteps that end up costing homeowners money.
1. Not getting the home inspected before buying
Not having a house inspected before you buy it could mean a great deal of financial trouble in the future. An inspection can identify problems that could become costly if not dealt with. You'll probably want the seller to take care of certain things before the sale or negotiate a price reduction to account for the cost of needed repairs.
2. Not taking information with a grain of salt
There has never been more information available to us, thanks to the many sources across the Internet. Unfortunately, this information saturation comes with the possibility that you may obtain inaccurate details about housing markets, your own home's value, or other details surrounding the process of buying and selling a home. Check multiple sources and only take advice from trusted professionals.
3. Taking on more than you can afford
Many buyers, eager to have a new home, are infatuated with expensive houses that are really out of their price range. Once your lender approves a mortgage for the home, you would do well to ensure that your income and lifestyle will be able to accommodate the price of the home and monthly payments.
4. Not getting the right type of mortgage
One common mistake prospective homeowners make from the get-go is not securing the right type of mortgage to meet their needs. There are pros and cons to both fixed-rate and adjustable rate mortgages (ARM). With a fixed-rate mortgage, you can expect consistency in payments throughout the duration of the loan, which means you can save money if interest rates climb. On the other hand, with an ARM, you'll likely get a lower introductory rate. Consider your own plans. Then decide which one makes the most sense for you. Nevada State Bank professionals are ready to help you.
5. Not making a large enough down payment
Making a large down payment to reduce the size of your mortgage could save you thousands of dollars in interest charges over the life of your home loan. While it might pinch your budget now, it will probably be worth it. Discuss the various options with your banker to see how the size of your down payment will affect the total cost of your home.
6. Not regularly contributing to a savings account
If you own a home, but don't have a savings account, you run the risk of not being prepared for major repairs. These can catch you off guard, especially if this is your first home and you are not used to having to pay for repairs yourself. Remember that you no longer have a landlord. You're on the hook if your hot water heater goes out, you need to call a plumber, or your roof needs to be replaced. Open a savings account and make sure to contribute to it regularly, which will help you cover those costs as they arise.
7. Spending too much for remodeling and upgrades
Avoid overspending if you choose to do any remodeling or other home improvements.
"Many homeowners, especially first time homeowners, embark on various home remodel projects," says Modest Money founder Jeremy Biberdorf.1 "The spending on these projects usually goes way over budget for two reasons. On larger projects, people don’t realize all the material items required for the project; therefore the budget is not realistic. An example is a kitchen remodel. People will budget for cabinets, appliances, flooring and countertops, which are significantly large items. They will forget items like light fixtures, a garbage disposal, plumbing fixtures, exhaust hoods, and a host of other items."
The second reason, he says, is that people don't always do enough research about different brands and other alternatives when moving forward with their projects. Always shop around and learn from others who have been in your position.
8. Not maintaining the home
Failing to properly maintain your home can be a major financial mistake, because if you put it on the market in the future, it may not be able to live up to its potential value. And, even while you’re living in the home, deferred maintenance can be costly. For example, just a few loose roof tiles can lead to expensive water damage, and leaky doors and windows can increase your monthly power bills. Find a home maintenance checklist online and go over it on a regular basis to make sure your home stays in great condition and can bring in the best price when it’s time to sell.
Owning a home is part of the American Dream, but making costly mistakes may turn it into a financial nightmare. Be cautious while making important decisions about your home so you can enjoy it for many years to come.
1. https://www.modestmoney.com/four-top-financial-mistakes-homeowners-make/15350