Buying your first dream property is synonyms with loads of different feelings. There is excitement and sense of accomplishment on one side and fear and a new responsibility on another. It may be an overwhelming experience, but still, something that everyone happily goes for.
Of course, room for mistakes is there with these deals. And if you are a first-timer, they can be bigger and complicated. If you want to know about them, then keep reading further –
- Not Knowing Your Budget
A wise home buyer would always determine his financial status before plunging into making a purchase. He would have to be comfortable in spending that much money. Now that is something which your bank doesn’t have to evaluate; you can do that yourself by taking into account the monthly expenses and subtracting it from your monthly salary. Once, you have an estimated figure, you would know what you can afford.
- Not Qualifying for Mortgage
People often end up making an offer on a home without having a pre-approval of loan. They just use the mortgage calculators and assume they will get the loan. However, in reality, your lender may reject or decrease the amount of mortgage, which can be problematic if you have already made the offer for the house. So, considering the probability of deal failure or financial setback, make sure you never skip the mortgage pre-approval step.
- Not Paying Largest Down Payment Possible
People are generally happy with down payments which are as low as 3%. But, financial experts recommend making a considerable down payment of twenty percent or more, especially when the price of the home is higher. It makes the loan balances smaller and mortgage rates lower, thereby reducing the overall interest that you have to pay for the loan. Besides, it helps in building a cushion to preserve equity in the property in case the market values decline.
- Not Considering Hidden Costs
A house purchase is way more complex than what it looks on the outside. It is not just diverting your rent costs towards payment of interest. Charges like closing costs, insurance, property taxes, association fees, and maintenance costs are also included which first-time homebuyers often forget. As a result, the total value of the house comes out to be far greater than what you thought of.
- Not Examining the Actual Quality of the Home
Buyers get easily enticed by the way a property looks. They get too excited to see those flashy elements such as granite countertops and stainless steel appliances in the kitchen. Unfortunately, this at times backfires after the dealing is done. Many homes are just given cosmetic touches to look good. That is why home experts stress enough on the assessment of the bones and structure with the help of a home inspector. He gives you an insight into the overall condition of the building and helps in calculating extra expenses you would have to incur for repair after a thorough inspection.