4 Common Mistakes to Avoid While Buying Your First Home
Buying your first home can be one of the biggest purchases of your life. It is a major milestone and a major investment which if done incorrectly, can lead to costly consequences.
Here are some of the 4 common mistakes to avoid when buying your first home:
Spending more on a house than you can afford
Money is arguably the most important factor to be considered when buying your first home. Many people miss it here. It’s easy to get carried away with the house such that you want to empty all your life savings to buy it. Just because you can borrow a certain amount doesn’t mean you should. You should know that there are other expenses associated with owning a home that is not limited to the cost of the house. Expenses such as the purchase of furniture and other small homes improvement projects can easily be overlooked when securing a mortgage.
Buying a house before you’re financially ready
For a first time home buyer, the decision to buy a home can be a capital-intensive one that requires having a solid financial backbone. If you’re feeling pressured to buy a home when you’re not financially ready, that could be a disaster. The truth is, taking on the obligation of homeownership is a major financial move that you should only undertake when you’re absolutely financially ready for it.
So, how can you tell if you are ready? First, you should have a down payment and a reliable source of income to cover your periodic mortgage payment. You should also have an emergency fund separate from your down payment fund. This account should have enough money to cover three to six month of living expenses. This emergency fund could be a backup if you buy a home and lose your job or incur significant costs. This way, you can avoid going into debt and handle surprise expenses which homeowners incur.
Getting a mortgage you don’t understand
Getting a mortgage is the most important vehicle to help you buy a home with little or no stress. A mortgage loan can be that financial assistance that can make all the difference in your purchase. That being said, it is important to sign up on a loan that you have clarity on the workings. If a mortgage loan seems complicated for you to understand, get professional help. Adjustable rate mortgages may become unaffordable if rates go up. Always ask what your starting payments with be, how interest rates works, and what your payments could go up. The rule of thumb with a mortgage is: if you don’t understand the terms, don’t sign for the loan.
Not insisting on a thorough home inspection
Home inspection is very, very important. Don’t assume that just because a house is new or looks nice, that it is in good condition. You need to do as much due diligence as you can when it comes to buying a house. There could be plenty of things wrong with the home that is hidden. You need to find out about any problems in the house before you move in and become responsible for covering costs. It helps to get a good a second opinion from an independent person. Should in case you discover problems, find out how much it will cost to fix them. Then negotiate with the seller either to make repairs or reduce the amount you need to correct the home flaws.
What was your experience like when you bought your first home? Share with us!