7 Easy Ways to Mess Up Your First Home PurchaseIf you’re a first time home buyer and you’ve never even set foot inside a real estate brokerage, be honest with yourself. Are you ready to own a home? More importantly, are you ready to buy a home? Owning the home is one thing. Buying it, and buying it well, is another. If you’re going to make mistakes as a homebuyer, you’ll likely make them when buying. Here’s our list of the seven easiest ways you can mess up your first home purchase. Watch out. 1. Get emotional. One of the easiest ways to mess up as a first time home buyer is to get emotional about the home you want to purchase. Don’t let yourself fall into this. You may really love the place, but if it’s $30,000 outside your price range, make a lower offer or move on. It’s a buyer’s market right now. There will be another home with a flagstone garden path and recessed lighting over the kitchen sink. First find a home that you can afford. Then decide whether or not you love it. Don’t approach it the other way around. 2. Buy a home that needs improvements. As mentioned above, it’s a buyer’s market right now. This means there are too many homes available. Unless you’re severely strapped for cash, don’t buy a home that needs major improvements. You honestly just don’t need to. The repairs will eat up your funds after the fact, these expenditure can’t be easily financed unless you refinance your home, which isn't something you can do right away. 3. Make improvements on the home you bought. Maybe you ignored the last point. The worst thing you can do now is actually make the needed repairs, thinking the value of the home will improve beyond the cost of the work. It won’t. Not in this market. Home values are still decreasing. Until they start going up again, major renovations likely won’t be worth the expense. 4. Skip the home inspection. You saw the home yourself. You walked through it twice with a buyer’s agent. And you’re an astute buyer, right? Of course. But if you decide to buy based on your own cursory overview of the property, you may end up needing to make major repairs. As mentioned in points three and four above, this will hurt you. 5. Forget maintenance costs. Don’t forget to factor in maintenance costs when planning your budget. Regardless of whether the home needs repairs when you first buy it, you should expect to spend a few thousand dollars each year on basic maintenance. 6. Forget property taxes. Another expense many first time home buyers forget to consider is the cost of property taxes, which can be excruciatingly high in some areas. Talk to your lender or broker as early in the process as possible and find out what taxes you’re likely to owe on your new home. Do this before you sign that dotted line, or you may find yourself short on cash by the end of your first year. 7. Spend too much money. This is probably the easiest of the bunch. It’s not hard to spend too much money on your new home. You’re taking out a mortgage. You’re spending money you haven’t earned yet, but you’ve got a job, and 30 years is a long time. In 30 years of work, you’ll probably make a lot of money, right? Hundreds of thousands of dollars? Millions, even? Sure. It’s the future. Go ahead and dream a bit. But the home you’re buying isn’t a dream. It’s real. You need to be realistic about your income, including your future income, and what you can afford to borrow with your mortgage. How much money can you realistically expect to be making next year? Five years from now? This will affect how much you place as a down payment, which will affect how much you borrow. This, of course, will determine what home you purchase. Don't let this list make you anxious or worried. Just use common sense, find a good home, and research the lowest mortgage rates, and you'll be prepared to move forward with confidence |
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