First-time Home buyers’ Five Biggest Mistakes
Mistake #1: Buying Too Much Home
Before house hunting, it’s a good idea to get pre-approved for a mortgage. When you’re pre-approved, you’ll know exactly how much you can afford to spend on a home.
Your mortgage broker is going to tell you the maximum amount you can spend, but keep in mind, that doesn’t mean that you should spend the entire amount.
Take some time to crunch the numbers and see if you can afford the mortgage payments on a monthly basis.
You’ll want to leave yourself some financial breathing room in case mortgage rates go up or you run into a financial emergency.
Mistake #2: Forgetting to Budget for Closing Costs
If you’ve never bought a home before, it’s easy to overlook closing costs.
They’re just a drop in the bucket, right? Wrong. Closing costs can add up to four percent of your home’s purchase price.
Mistake #3: Buying Based Solely on Looks
Have you ever stepped foot inside a house and it became love at first sight? You see everything you’re looking for in a home: granite countertops, stainless steel appliances and an open kitchen. You’re ready to make an offer right then and there.
But before you do, take the time to look at the bones of the home.
I’m talking about the roof, windows, furnace and structure. Anyone can install a new backsplash in a kitchen or toss some fresh paint on the walls, but replacing something significant like the roof can cause a lot of heartache.
Mistake #4: Skipping the Home Inspection
In red-hot housing markets, a new trend is for homebuyers to skip home inspections. And it makes perfect sense – when you’re competing against 10 other buyers for a house, including too many conditions can cost you your dream home.
What’s worse than losing your dream home? Winning what turns into your nightmare home.
For example, the home could have flooding issues. But if you don’t know the signs to look for, you’ll miss it. That’s an expensive mistake.
If you’re worried about including the home inspection condition in your offer, consider getting a “pre-inspection.” That’s a home inspection before you make an offer. That way you can make an offer with the confidence and peace of mind that you’re buying a rock-solid home, not a money pit.
Mistake #5: Not Shopping Around for a Mortgage
We comparison shop for everything from televisions to vacation packages, but so many people just take whatever mortgage their bank offers them.
There’s nothing wrong with your local bank branch being your first stop for a mortgage, but it shouldn’t be your only stop. By just taking the first offer, you’re likely leaving money on the table.
Buying a home is quite possibly the single-biggest financial transaction of your lifetime
Your local bank may have the best mortgage, but you won’t know for sure without shopping around. And the best way to do that is with an experienced mortgage broker
- Allan Harder – January 2018
