This article will cover the five biggest mistakes that homebuyers can’t afford to make when purchasing their first home.
Not knowing what you can afford/Not considering extra expenses
Buying a home is a dream for many people and realizing that dream can make people, well, dreamy. As a first time home buyer, you’ve got visions in your head for what you want in a home and sometimes those expectations might not match your budget. The very first thing any homebuyer needs to do before stepping foot in any house for a showing is to get pre-approved for a mortgage. What you get approved for might be a lot less (or a lot more) than what you were hoping for. Know your maximum spending budget and don’t look at houses that exceed this budget.
You’ll also have to consider any extra expenses that will definitely come up including:
- · closing costs
- · property taxes
- · utilities
- · repairs
- · moving costs
Make a spreadsheet of all these upcoming costs and make yourself a monthly budget to see what you can actually afford. Taking the maximum amount of loan out for a house may in fact make you house poor. Ensure that you are living within your means once you buy a house, or be doomed to eat meat in a can for the next few years.
Seeing too much potential
A home seller’s job is to wow their buyers. A buyer’s job is to see past the wow factor and consider what’s truly great about the home. The kitchen may be a gorgeous upscale space with stone countertops and brand new stainless steel appliances, but the furnace and roof could be on their last legs. Don’t become mesmerized by esthetics when you walk into a house, instead seeing the functionality of the space and how it works for your family. Always get an inspection, so you can be well-informed about what repairs the home will inevitably need and make a level-headed, emotionless decision.
Not seeing the potential
On the flipside, first time homebuyers often overlook the potential of a home for the exact opposite reason – it isn’t esthetically pleasing. See the value of a home in a great neighborhood, with a large lot, big windows and few repairs needed. If the kitchen or floors need updating, that could be a big expense, but you can also find ways to do it cheaper. Your first home won’t be perfect, but imagine the possibilities ahead.
Not thinking ahead
As a first time homebuyer, you might be a young single or newly-married and are just looking at your first home as a place to entertain friends and come to after work. But, thinking ahead will definitely pay off. If you plan to have kids in the future, don’t get a two-bedroom home, as it will quickly become evident you won’t have enough space. You don’t want to be forced to make the decision to move, when you can think ahead and plan for what you want the future to look like.
Not hiring an agent
Having an agent to take you to look at houses is not only cost-effective and handy, but it can protect you from a bad business deal. Select a realtor who knows the area you intend to buy in and can give you advice about schools, parks and other amenities. A realtor will know the history of the home and the neighborhood and advise you against buying where you might not fit in (i.e., in an area with a history of crime). As well, they can negotiate the best deal for you and are well-versed in all the intricacies of real estate contracts, so you don’t get stuck signing something you shouldn’t.
If you need help finding your first home, it would be my pleasure to assist you.