So you have decided to own your first property? Congratulations! You have just taken one of the most exciting and important decisions that you can make in your lifetime. It is to be noted that many first time home-owners make some very common mistakes, something we hope to warn you against in this article.
- Buying a property that you cannot truly afford: The sub-prime mortgage fiasco that caused the most recent global financial meltdown has taught us that what the bank thinks we can afford to pay as mortgage payments and what we can truly afford can be completely different. To avoid digging yourself in a hole, I would suggest you do a very simple exercise. Take your average monthly income and deduct all your non-negotiable expenses except rent from it, such as student-loan payments, car payments, credit card payments, groceries, retirement savings etc. Remember to add expenses that you incur only once a year such as vacations, any insurance with annual premiums, etc. What you are left with is what you can truly afford. Only look for properties that fit this budget. If you are not satisfied with what is available within your affordability, then reduce your expenses or increase your income first before you make this life-changing decision!
- Not doing sufficient research: Thanks to the internet, you have a treasure trove of information at your fingertips. Take a break from the cat videos on Youtube and spend some time looking at the data. After a few keyword searches you can find market rates broken down by property sizes and neighborhoods. Be armed to the teeth with this information before you visit a single property!
- Not finding the right real estate agent: As a first time home owner, you need a real estate agent who would be patient enough to genuinely understand your needs and provide you with the best advice. Try going for someone who you actually feel comfortable speaking with. Although a real estate agent will have her best interest in mind, try finding a buyer’s agent instead of a dual agent because she would be most likely to consider your interest as well!
- Skipping the home inspection: According to Bill Loden, president of the American Society of Home Inspectors, many first time owners balk at the typical $450 fee and not hire a professional home inspector. In our opinion this can be outright silly because home inspectors are adept at finding faults with properties that seasoned real estate agents easily hide from unsuspecting buyers. These inspectors not only see what’s wrong with the house, but they also point out what it would take to maintain that particular property, thus making you aware of the real cost of home ownership. With rising prices and the mortgage costs, getting your property inspected by a professional should be absolutely imperative before you sign on the dotted line.
Although this list is not comprehensive, they are most common mistakes homebuyers tend to make. Keep these in mind and you should find a home that you love in no time!