Buying your first house? Beware, new home buyers will make mistakes, it happens. These critical missteps usually happen when buyers are misinformed or don’t ask the right questions.
It can be tough to watch, because a big percentage of buying mistakes are avoidable. Take these tips into consideration when you buy your first house.
1. I wish I hadn’t borrowed the full amount I was approved for
Just because you’re approved for it doesn’t mean you should buy the most expensive house you can. It’s wise to give yourself breathing room financially. You don’t have to deplete your savings, and you don’t have to make the maximum monthly payment that you qualify for. Buying a home well below the maximum will safeguard your family and your financial security.
2. I wish I hadn’t financed my home with the adjustable rate mortgage
If you can, avoid adjustable, creative financing, and balloon payments. No matter what life happens to throw at you, your monthly mortgage payment will always be constant.
A fixed mortgage will be the same no matter how the market, interest rates, or the economy changes over time. That predictable, constant expense will help you make other financial decisions down the road that creative financing just can’t provide.
3. I wish I hadn’t used up all my cash
Your cash expenses when buying a home amount to more than just the down payment. Some additional costs include closing costs, appraisal fees, buyer’s broker fees, loan application fees, loan broker fees, inspection fees, and other costs to factor.
The down payment and closing costs are your upfront costs. After that, the ongoing costs include property taxes, homeowners insurance, hazard insurance, condo, co-op or HOA fees, and moving expenses.
Don’t be left with a zero balance in your checking account by the time you get the keys; prepare for these additional costs ahead of time.
4. I wish I hadn’t wasted my time with foreclosures and short sales, only to miss some really good deals
Just because it’s a distressed property doesn’t mean it’s a good deal; foreclosures aren’t a guaranteed bargain. If you’re searching for a steal and you want it in a timely manner, avoid short sales and foreclosures.
These deals can drag on for months and generally have higher interest rates. Even if the distressed home is well priced, the hoops you’ll have to jump through may just offset your cash savings.
5. I really wish I had met the neighbors before I bought the house
Not only will meeting the neighbors give you a good idea of whether you will be compatible, but neighbors will disclose material facts that a seller might fail to mention. You’ll be surprised what the neighbors might tell you and what you could find out. It might save you from making a buying mistake and moving into a neighborhood where you could be miserable down the road.