7 Common mistakes made by first-time home buyers
Common Mistakes Made By First-Time Buyers
Rising home values, a hot market, consumer feelings of a ‘good time’ to buy a home – all these create a perfect storm. A potentially fatal environment for first-time home buyers to make mistakes. Watch out for the situations below. You can say yourself a lot of heartache and money by following this advice.
Renting may be a better option
Moving into a new home has notable benefits like tax benefits and the feeling of owning your own residence. But buying comes with steep costs upfront. Some may find renting to be a better option. Online calculators can help you make that decision.
Ask yourself how long you will live in your new home. Do you plan to move if your job or business requires you to do so? For some, they cost to exit homeownership may be steep.
Do not forget the expenses associated with homeownership. Homeowner’s insurance, closing costs, down payments and paying someone for landscaping and repairs add to the cost total.
Online Loan Information Becomes An Edict
Researching mortgages online is a good call. First time homebuyers need to know if they can receive special financial products like FHA loans or VA loans. But an online loan tool does not replace an in-person meeting with a financial expert. Many poor first time home buying experiences result from ignorance over costs and terms of homeownership.
Shop around with different loan officers to discern the variations between the loans on the market currently. A company may not charge a certain fee, but will include a higher interest rate.
Rely too much on online home values (think: Zillow)
Once again, putting too much faith in the internet can be a bad move. Sites like Zillow can misrepresent home values to the chagrin of real estate agents. The online website may say the home is worth $200,000 but the actual value may be $350,000. In this case, the client loses $150,000 just because they relied solely on the online data.
Riding with a real estate agent provides first-time buyers with valuable information. Driving by a home at night benefits homebuyers too.
Some buyers pass over the home inspection.
A small group of buyers do not inspect their new homes before closing time. These new buyers want to spend as little as possible. Thus, they cut costs. Yes, missing out on the inspection can save money (starting at $400) and time of a two – to – four-hour inspection. But a stroll through a home by a knowledgeable third party can save hundreds, even thousands of dollars down the road. Buyers may save hundreds of thousands of dollars by not buying a defective house.
A wrong attitude before viewing the home.
Most people exude a positive attitude before moving into a new home. But some nitpick over every little cosmetic issue, complain and make the home viewing experience bad for everyone. These people forget the home buying experience is an interviewing process conducted by the listing broker. A bad first impression can be a lasting bad impression. Often the complaints are small-ticket fixes. Things like a chip in the paint can be fixed easily and cheaply.
They believe the home price will go up forever!
People put their all their money into their home, hoping it can turn into a nice nest egg for retirement. Or just a tidy profit in 10 years. This thinking hurt many people during housing market downturns, especially during The Great Recession.
They rush to buy.
Do not rush to buy a home. Take your time. Do the necessary research. Meet in-person with a real estate agent or broker. Find the home of your dreams. Rushing to buy a home does your bank account and livelihood a disservice.
Follow these tips to avoid common mistakes made by first-time home buyers!
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