Becoming a first-time home buyer is an exciting development. For many, this purchase represents a lifetime of aspirations, savings and hard work. Avoiding these five common first-time homebuyer mistakes will help you sidestep unnecessary stress as you navigate this life-changing transaction.
At the end of the day, you’re making a big commitment that will impact your life for a few years. It is important to understand these common pitfalls to ensure this decision is one you will be happy with.
Buying more houses than you can afford
Becoming a homeowner isn’t just about getting your initial mortgage. If your monthly payments push your budget to the limit, this can both cause psychological distress and prevent you from comfortably affording other items you may need.
Owning a home is a big commitment, financial and otherwise. You will be responsible for managing your property, taking care of regular upkeep and upkeep. Roofs leak, windows break and pipes burst. Will you have enough savings and energy to repair these items?
Plus, the bigger the house, the bigger the bills will be too, with heating and cooling costs taking a chunk out of your wallet. Property taxes will add an additional expense to your monthly budget and
Plus, the bigger the house, the bigger the bills will be too, with heating and cooling costs taking a chunk out of your wallet. Property taxes will add an additional expense to your monthly budget. Since they are directly related to the value of your home, the more expensive the property, the higher your subsequent obligation will be.
Experimenting with TipRanks’ mortgage calculator can help you get a feel for the contours of your potential mortgage, your monthly payments (including insurance, estimated property taxes and homeowners’ association dues), and the overall cost of this loan. Make sure it’s what you can afford.
Ignore the neighborhood and Surroundings
The home you purchase will likely be your center of gravity for at least a few years. Make sure you and your family feel comfortable building a life in your new community.
While it’s easy to get carried away by any particular property, no individual or family is an island. The surroundings will also be part of your daily existence, so it’s important to do some research to see if the area suits your preferences. This includes the overall feel and comfort level of living in the neighborhood, but could also include finding schools, parks, and public transportation options.
A primary residence is never just an investment property or a stepping stone to another future home. Even if you sell your home in the future and upgrade to a better property, you will still be living in your current home for the foreseeable future. Make sure it’s one you feel comfortable calling home.
Letting the perfect become the enemy of the good
Buying a house is a monumental purchase, which requires an enormous amount of sacrifice and effort. It’s natural that you don’t want to settle for anything, but waiting for the perfect match between size, zip code, age and every other consideration under the sun can mean never making an offer.
Think about the most critical aspects of your future home. By defining the absolute requirements for your residence, you also take the time to think about where you might be willing to compromise. This will help you narrow down your search, while giving you the freedom to search for those properties that meet the criteria that are most important to you and your family.
Continuing the search until all the stars align can be more than a little frustrating. It could also result in never owning a home.
Don’t take advantage of public funding
There are numerous federal government programs designed to help aspiring homeowners from different walks of life.
The Federal Housing Authority (FHA), for example, provides mortgage guarantees for those who want to purchase their primary residence. The FHA will guarantee up to 96.5% of your mortgage, which means if you work with a qualified lender you may only have to provide a 3.5% down payment.
The Veterans Administration (VA) also provides loan guarantees to private lenders. The VA program allows veterans, active duty service members and eligible spouses to purchase a home with no down payment.
The United States Department of Agriculture (USDA) has a number of programs designed to help would-be rural homebuyers build a life in less populated areas. The USDA offers both direct loans and loan guarantees.
Many states also offer homebuying assistance programs, so be sure to look into all of these options available to you.
Do everything yourself
There are many professionals who dedicate their working lives to helping people buy and sell homes. These experts have accumulated a lifetime of experience working on problems and issues that can pose major obstacles for both first-time and experienced buyers.
Working with a trusted advisor can help you overcome the financial, regulatory and logistical hurdles inherent in a business transaction of this size. Details are important and it is likely that you will not be able to consider all the various issues involved if you choose to do it on your own.
If you’re not sure where to turn for assistance, conduct some research online to see who has good reviews, ask your social circles for recommendations, or even consider visiting an open house or two to have in-person conversations with real estate agents.
Their job is to help you navigate this process. Don’t be afraid to work with them to do this.
Bottom line: There’s no place like home
Your home is more than a physical structure, much more than simply four walls and a roof. Rather, it is a place of refuge, comfort and relaxation.
There are many questions related to purchasing your home, some of which can cause stress and anxiety. Finding the best fit for you depends on a number of different considerations that you should make sure you take into account.
As you pursue your homeownership dreams, be sure to avoid making these common mistakes. It will make your journey less bumpy and ultimately increase your chances of success.
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