Whether you're a first-time buyer or you've been around the block a few times, there are certain home buying mistakes that trip people up time and time again.
Before you sign on the dotted line to purchase your next home, take a look at these common mistakes to make sure you're not in danger of committing any of them.
Here's how to avoid the mistakes:
Falling in Love at First Sight
Don't mistake your initial enthusiasm over a home as a sign that it's "the one" for you. You may be swooning over its grand master suite or landscaped backyard, but if it's off in other fundamental areas? like missing an extra bedroom or creating a long commute to your job? you won't truly be happy there in the long run.
It's always a good idea to sleep on it if you can, and to bring along someone (like a spouse or trusted friend) who can bring you back to reality when needed.
Having an Unrealistic Wish List
No house is 100% perfect, and you can miss out on some great properties if you get too hung up on checking off everything on your wish list. Get clear on what counts as a "must-have" and what's simply "nice-to-have." Perhaps a great school district is a "must," while granite countertops are "nice."
Don't get swayed by beautiful fixtures and finishes. You can always update your home later, if the basic fundamentals (location, size, price) is a great fit for you.
Not Considering the Neighborhood
You're not just buying a home; you're also buying its neighborhood. So make sure the neighborhood is one you'll want to live in for the foreseeable future.
What is the street traffic like? Is it in a good school district? Is it close to amenities you value, like a pool or shopping center? And don't forget your immediate neighbors? will you be living next door to a house full of rowdy kids (or a grumpy curmudgeon who won't appreciate your rowdy kids)?
Not Getting a Home Inspection
You wouldn't buy a used car without first making sure it ran properly, so why would you buy a home without first making sure it runs properly?
A home inspection is a crucial part of the home buying process that can save you from tens of thousands of dollars in unforeseen repairs down the road. Never buy a piece of real estate without first getting a thorough home inspection from a licensed professional.
Ignoring the Resale Value
Don't forget that purchasing a home is one of the biggest financial decisions you'll ever make. While your main concern is finding a home that works well for you in the immediate future, also bear in mind its potential resale value years from now.
Is it in an up-and-coming neighborhood, or do the other homes on the block look permanently run-down? Are you thinking of making some custom changes to it (like turning the garage into a family room) that could turn buyers off when it's time to sell? You ideally want your home to increase in value over time, but remember: not all houses rise in value. Appreciation is not a foregone conclusion. Research neighborhoods closely, and make the most educated choice possible? while accepting that we can't ever know the future with total accuracy.
Overestimating Your DIY Tendencies
Buying a fixer-upper can be a great investment? if you're willing to put in the sweat equity. It's easy to get excited about renovation potential when you're touring a home and envisioning its possibilities, but you need to be honest with yourself when it comes to how much work you're really willing and able to put into a home. Otherwise you'll end up with a never-ending project you'll only resent.
Making a Small Down Payment
If you can't afford to put down the full 20% on a house, you should seriously reconsider whether you're ready to buy a home. Putting down anything less than 20% means you'll be hit with private mortgage insurance (PMI) payments, which is an extra payment you'll need to make each month, in addition to mortgage interest and your principal balance.
If you ultimately decide to go forward, shovel as much money as possible towards your mortgage so that you can reach a 20 percent equity threshold quickly. Once you gain 20 percent equity, you can request to stop making PMI payments, but you'll need to pro-actively initiate that process - it's not automatic.
By Paula Pant.
Find the Right Financial Advisor for You
Free Initial Consultation. No Match Fees. No Obligation
Need a Financial Advisor in your area?
Most Popular Articles
Important Financial Articles