Last Updated on June 11, 2020 by Jason
Are you making plans to buy your first home? The process of shopping for a new home is exciting, exhilarating, exasperating, exhausting, and sometimes a little scary. The end goal is to find the home you can afford that you will live in for a long time. It all seems so simple, doesn’t it?
Unfortunately, there are mistakes that many first-time home buyers make. You can learn from the mistakes of other new home buyers, and prevent them from happening to you with these tips.
Knowing What You Can Afford
Not knowing what you can afford is a big mistake. The bank may tell you what you can afford based on your income, but only you know how much you can afford and are comfortable with paying. Create a budget by making a list of all your monthly expenses (except for rent) including auto loans, credit cards, insurance costs, retirement savings, groceries, utilities, entertainment, vacations, and whatever you pay annually like other insurance premiums. Subtract your total expenses from your income and then you can estimate what kind of mortgage payment you can afford.
Factor in Additional Expenses
Consider expenses that you will acquire by owning a home. Property taxes, property cleaning & maintenance and repairs, house insurance, and the possibility of higher utility expenses are part of the joys of home ownership. Consider any kinds of repairs you might incur from buying a home as well.
Your credit report will determine how much a lender will lend you and whether you can obtain a mortgage. Pre-approval prevents wasted time and energy for you and your real estate agent. Be careful about what you do after you get pre-approval since there are things that might alter your credit score or debt-ratio after pre-approval. For instance, if you get a car loan.
You can’t be inflexible or too picky when you’re in the market for a new home. New home buyers may have to compromise a little due to limited funds or for other reasons. Things, like forgoing a spare bedroom, making a few home repairs, or living on a busier street than you would like, could be part of that compromise. If you’re truly in the market to buy your first home, accept that some compromise may be necessary.
Look at the Big Picture
Imagine you find the perfect home, but it has ugly wallpaper in the bathroom or ugly flooring in the kitchen. You can probably live with those little issues in exchange for buying your dream home. Those are things you can change with a couple of renovations. Physical imperfections shouldn’t make or break the deal when you like the location, size, and layout of the home.
Be Aware of Quick Fixes
Sometimes homeowners make little fixes and minor upgrades to try to appeal to your emotions and to try to get more money for their home. If you’re on a budget, look at homes with potential that you can fix up yourself and save the thousands of dollars that minor fixes could cause.
Other things to do when buying your first home include get the home inspected, don’t compromise on the big things, and consider the future of the location where you buy. By adhering to these tips, you can avoid the common mistakes of first-time home buyers and feel confident about buying a home.