There are few things in life as exciting as buying your first home. Just make sure you go into the process knowing what to expect and are prepared to handle it. Avoid these 10 common mistakes.
1. Waiting Too Long to Start Saving
Don't wait too long to start saving for your down payment. The larger your down payment, the smaller your mortgage and monthly payments will be, and this will help your budget for years to come. Start saving now so you can put down a sizable amount and make things easier over the long term.
2. Thinking Too Big
How much house do you really need for your first one? Are you married? Do you have children? Do you plan to? The size of your family (or potential family) should be considered, but if you are single or living with a partner, you might want to resist the temptation to buy a larger house with much more space than you really need. Going bigger means going more expensive most of the time.
3. Not Learning About the Neighborhood
Make sure you have a good idea what to expect from the neighborhood you live in before you make the commitment of buying a home there. Research crime, traffic, schools, proximity to work and to places of business you're likely to frequent, and any other concerns you may have. Perhaps rent a home or apartment in that area to understand the neighborhood better before you buy.
4. Not Having Your Debt Under Control
Make sure you have your debt under control before taking on a mortgage. Otherwise, you might be headed toward a difficult financial situation.
"Debt weighs you down," says Ramsey Solutions. (1) "If you’re trying to buy a home while you’re forking over hundreds (or thousands) of dollars every month on debt payments, you’ll run into one of two big problems. Either it’ll take you forever to save a down payment, and you’ll wind up taking out a bigger mortgage so you can speed up the process, or you’ll struggle to make your mortgage payments on top of your student loans, car loans or credit card bills—putting you one emergency away from missing a house payment. Heck, you may even run into both of these problems!"
5. Not Looking Into Assistance Programs
Many assistance programs are available for qualified first-time homebuyers. Be sure to look into these, as they might be able to save you a significant amount of money.
"Some first-time home buyer programs are saved for lower-income buyers and buyers from under-represented socio-economic groups," says Dan Green at HomeBuyer.com. (2) "Others are first-come, first-served with no restrictions at all. Don’t miss a chance for free homeowner money. Check with your local county website for housing assistance programs and visit the government’s HUD website to find other state and national programs."
6. Not Talking to Different Realtors
Speak with more than one real estate agent when you begin looking for a home. Others may be able to find different available properties and provide you with unique perspectives than can be useful during your house hunt.
7. Looking at Houses Before Exploring Mortgages
It's wise to figure out what you can afford before you start looking for a house to buy. Talk to your banker about how much the bank would loan you on a house. That will help you decide how to set your price range as you look. This is a much better alternative than finding a home you love, only to discover you can't afford it.
8. Not Saving for Closing Costs
Don't forget to factor in closing costs when you're saving for your down payment.
As Investopedia explains, "Closing costs are the expenses over and above the property's price that buyers and sellers incur to complete a real estate transaction. These costs may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed recording fees, and credit report charges. By law, lenders are required to provide buyers with a closing disclosure three business days before a scheduled closing, or settlement, date."
9. Not Looking Ahead Toward Maintenance
One of the responsibilities of homeownership is that you are fully responsible for maintaining the property and seeing that any repairs are made. This can be expensive even with a newer property, as well as an older fixer-upper. Before you make the commitment, make sure you're comfortable with the potential cost of upkeep.
10. Not Researching Surrounding Areas
Many people look to buy a home in a specific city, but you might be able to get a much better deal if you look in surrounding areas. Bigger cities tend to have higher property values, but if you don't mind living in a smaller town, you might be able to get more home for your money.
Buying your first home should be a joyous experience. Avoiding these 10 mistakes can help ensure that you make the right choices and are happier with your new home.
1. https://www.ramseysolutions.com/real-estate/5-home-buying-mistakes-young
2. https://homebuyer.com/learn/first-time-home-buyer-mistakes#toc-7