Buying a first home is a big step, both financially and personally. In the long run, home ownership can lead to many other investment and and financial opportunities. Of course, owning a home also gives a sense of pride and accomplishment that is matched by a very few other things in life. However, the path to home ownership is not an easy one. There is a slew of potential mistakes and pitfalls that you must avoid when buying your first home, such as:
Not working with an agent
It is possible to purchase your first home without the use of an agent – but it is certainly not advisable. This is especially true when you consider that the seller will almost always have an experienced real estate agent on their side to help with negotiations. The seller’s agent is always working to serve and protect their client’s interest, and not yours. Since you don’t want to be unduly disadvantaged, it is a good idea to have your own agent who can protect your interests in the transaction. Your bank account might just thank you later.
Choosing the wrong mortgage
The world of home lending is vast, and there are many different products and services available in the market. These products are designed to suit an array of different financial circumstances. As such, it is important to choose the right product for you. Make sure that the loan type you have selected is within your means. If you are ever unsure you should speak to a mortgage lender or financial adviser who will be able to point you in the right direction. A bad decision at this point could potentially cost you tens of thousands of dollars in the long run.
Blowing your budget on a house
Lenders often determine whether or not something is affordable based on your credit score, tax documentation and spending history. Sometimes, this can mean a loan approval which is more than you can realistically afford. You should be cautious when this happens – spend within your means, as defaulting on a home loan will have disastrous results, including foreclosure of your home. Put simply, just because a lender is willing to give you a bunch of money doesn’t mean you need to spend it. Buy something you can afford instead.
Not shopping around
When you are in the market for a new home, make sure to shop around and look at multiple services, prices and options before making any decisions. This applies not only to the home you will buy, but also services such as financial lenders, real estate agents, lawyers and accountants. Shopping around not only gives you a better sense of the market, but also can be used as leverage against other providers to potentially negotiate a more favorable deal.
Buying after one visit
A home is not like a home appliance or electronic gadget – it is a commitment that you are going to keep for a long time. That being the case, it probably isn’t the wisest decision to purchase a home after just one visit (although it is still done by many in the market). Instead, try to visit the property multiple times over several different days to get a true sense of the home and the neighborhood. Of course, you should also make sure that you conduct a thorough inspection of the critical parts of the house (foundations, structure, roof) to ensure everything is up to standard before buying.
Purchasing your first home is no easy task. However, by avoiding the mistakes listed in this article you will be able to make the process that much more straightforward. All you will have to do is lay back and enjoy your new home.