Buying your first home is definitely a thrilling experience. You’re finally moving out on your own and are ready to start a new life in your new house. Or, you’re finally going to stop paying rent and move under your own, very personal roof.
Either way, buying a house is both a huge and exciting decision.
However, mortgages aren’t your typical short term loans. Although home loans are among the few good reasons to get into debt, you should also be careful when making such serious financial commitments.
Typically, home loan terms range from 15 to 30 years. Unless you have the cash on hand to pay for your new home immediately, you’ll be in debt for the next many years to come.
Although applying for a mortgage shows you’re thinking of your future, it’s important to avoid certain mistakes first home buyers usually make when purchasing a home.
Mistakes to avoid when buying a new home
1. Not saving enough money for a down payment
Paying for your home with cash is ideal, but not many people have that kind of money. However, saving enough for a serious down payment should help a great deal!
You may not afford to “skip” your mortgage, but you can very well make a financial effort and save as much as you can for your initial down payment. Not doing so can cost you a fortune in the long run.
The bigger the down payment, the less you have to borrow. And furthermore, the less you have to borrow, the bigger the chances you’ll qualify for a lower mortgage interest.
2. Failing to account for a realistic price range
Many first time home buyers fail to realize the true cost of a new home exceeds the standard monthly mortgage payments. Unfortunately, not acknowledging a realistic price range for a house can put a strain on your finances.
Monthly mortgage payments include taxes and interest. However, they also include insurance (if you buy it separately), home maintenance costs, utility bills, homeowners’ association fees and so on.
Before you officially sign any papers, make sure you can afford to buy your new home.
3. Skipping the pre-approval process for your mortgage
A mortgage pre-approval process might be boring, but it’s necessary! Unfortunately, many first home buyers prefer to skip this step and, you guessed it, it can turn out to be a costly mistake.
Shopping around without knowing what you can afford isn’t helpful. You may have your dream house in mind, but planning ahead always goes a long way.
4. Shopping around too little (or too much!)
Speaking about shopping for houses, looking at too many homes or wanting to buy the first one you see is a big no, no.
Wasting too much time to look for the perfect home for you and your family isn’t exactly the most productive use of your time (or your agent’s). On the other hand, ‘falling in love’ with the first house you see isn’t OK either. Yes, you might end up buying it anyway, but you should look at other properties as well to make sure you’re about to buy the right home for you.
5. Being emotional when deciding to buy a property
Smart home sellers know how to stage a house in order to sell it faster. But before you make a buying decision, try to visualize the property from your own point of view, not the seller’s.
Cosmetic upgrades mean nothing if you don’t see yourself or your family live comfortably under that very roof. Don’t let emotions stand in your way and focus on being objective when you’re checking out a new property.
6. Ignoring a thorough home inspection before buying
Are you 100% sure your new home is perfect?
A home inspection might seem like an inconvenience, but it can save you a lot of trouble later on.
Before you and your family move in, make sure your new home is safe and see if anything needs fixing before you sign a deal.
7. Avoiding to work with real estate agents
Last but not least, let’s talk about real estate agents.
Yes, they will only work for a fee, but did you know that they can actually save you thousands?
Real estate agents sell homes for a living. Surely they know the ups and downs of the real estate industry. Best of all though, a reputable real estate agent knows how to guide you through the home buying process, they can help you handle all the paperwork correctly and save you both time and hassle.