5 Mistakes First Time Home Buyers Can Easily Avoid
Love is the air. As a first time buyer, you have envisioned yourself owning your first home, and splashing your personality in each room. You will fall in love with the vision, and try your best to have reality meet up to it. It’s important to have goals and to own a home you look forward to coming to every day. In the midst of all the excitement, there are some tips first time buyers can avoid to help themselves achieve better outcomes.
First time home buyer specialists offer their advice on the top mistakes buyers make, and how they can be avoided.
1. Focusing On the House, and Not The Neighborhood
Often, many first time home buyers focus on the home and their budget, without considering the lifestyle. Homebuyers need to have a very clear list of wants and needs in a home, and have the ability to understand and separate the two.
For example, needs in a home can include the number of bedrooms or washrooms, and are items on the list that cannot be sacrificed. Everything else, the wants, are nice to have but not necessarily a deal breaker. In addition, the neighborhood and lifestyle should also make the list.
Certain lifestyle choices, such as having your work or school nearby, the right transportation, highways, fitness clubs or being close to relatives, should all be considered.
2. Not Obtaining a Pre-approval
First time home buyer specialist will always urge his clients to obtain a pre-approval to better understand their price range. This will save buyers a lot of time, money, and heartbreak. It is a better strategy to understand what you can afford, to live comfortably, and hunt for the mortgage first before the house. Falling in love with a home, and not being able to obtain a mortgage for it can really put a strain on your experience to finding the right home.
3. Skipping the Home Inspection
A home inspection should be a mandatory practice amongst all home buyers, whether it’s your first or 5th home you are buying. Obtaining a home inspection will eliminate any unwanted surprises and better help to keep your future budget aligned with your goals.
Opting out on a home inspection could become a really expensive mistake, even after only owning your home for months. Home inspectors focus on a range of items from minor items such as faucets and electrical appliances to larger items such as roofs, basements and more. If there is an issue with the home, at least you are aware of the future implications to adjust your budget and you can also use this as a negotiating strategy to lower your offer. First time home buyer specialists will always advocate for buyers to beware of their purchase, regardless of how well the condition of the home appears.
In the U.S. approximately 10% of buyers forgo doing a home inspection, despite 85% of homes having foundation issues, according to CNBC.
4. Spending the Maximum Budget
Many first time home buyers search for homes using their maximum budget, once they find out what they are approved for. The monthly mortgage payments, combined with all other payments, can send home buyers into less than favourable outcomes.
It can be a better strategy to choose a home priced less than your maximum budget, and accelerate monthly payments. For example, if your monthly mortgage was $2,000 a month for a home listed for $500,000, and the monthly mortgage is $1,500 for a $400,000 home, it may be wiser to choose the latter. However, instead of paying the $1,500, buyers can opt to pay $2,000 every month instead, to pay off their mortgage faster. This additional amount will go towards paying off the principal, instead of the interest, adding more equity into the home sooner. Planning for the long term is just as important when making a decision as large as buying a home.
5. Not Working With an Agent
Working with a real estate agent provides much more value than the information you find online. Buyers do not pay fees for their agent, their commission is negotiated with the sellers.
It can feel very overwhelming when searching for homes, and first time home buyers , in particular, can truly benefit from the knowledge agents provide. In addition to searching for your dream home, based on your criteria, they also provide expert knowledge about the neighborhood, home evaluations, and can negotiate better prices and terms for you. Agents, especially first time home buyer specialists, are aware of the different incentives for the first time home buyers and can help guide their clients to make better short, and long term, decisions.
Government programs such as tax benefits and down payments requirements differ for the first time home buyers. It is incredibly beneficial to have an expert to turn to, to learn about the process, helping you with the legal paperwork to help you optimize your budget and make the best decision for your investment.
There are no words to describe the joy first time home buyers experience when they are handed the keys to their very first home. The experience and strategy to help you get there are just as, if not more, important to help you maintain that feeling throughout the ownership of your home. House hunting can easily change from excitement to feeling overwhelmed, however, staying confident and sticking to your strategy will all be worth it. Good luck!