9 Common Mistakes First-Home Buyers Make (and How You Can Avoid Them)
As a first-time homebuyer, you’re about to embark on a very important journey in your life. What most newbies in the housing market don’t always realise though is that home-buying pitfalls can happen to even the most meticulous people.
Purchasing a property comes with more risk and responsibilities. While this list can’t cover all potential mistakes, it may give you a steady-enough foundation to help you make smarter, strategic decisions for your first home.
Mistake #1: Not Knowing What You Can Afford
Creditors take the time to look at your finances in a way that you may not have considered.
Before your lender has a chance to turn you down for the home of your dreams, know your total income, assets, and debt, and find out what sort of mortgage repayments can you afford. A quick and easy way to do this is by using loan calculators.
You will also want to speak to a Shore Financial broker to see what loan amount you may qualify for. A broker can work with you to determine what you can afford to borrow and find suitable options that meet your situation.
Mistake #2: Choosing a Costly Loan
It’s not easy to compare and contrast different features against each price point, which is why most people can’t tell the difference between a good and bad loan. This brings us back to the importance of speaking with a good broker, who can cut through the jargon and explain to you clearly how a loan works and what it costs.
With a loan, what you pay depends on the length — whether you choose fixed- or adjustable interest rates — and how quickly you can pay down your principal. It’s all too easy to choose a package that empties your wallet without actually paying for the house.
That’s why it’s important to read up on the different products available and find out what type and size of mortgage are right for you.
Mistake #3: Neglecting Home Inspections
Before you commit to buying a home, you want to be sure you are buying a well-maintained property. You don’t want to sign a contract now only to find out weeks later that the floorboards are starting to rot or the ceiling is sagging.
This is why it’s crucial to have it examined by a professional home inspector; in fact, banks require this before they formally approve the loan. Deciding to skip this step may save you time and money in the short term — but it could cost you far more than your mortgage payment to keep your home intact.
Mistake #4: Not Looking at the Neighbourhood
The neighbourhood of a home is more than just its shops and restaurants. You need to consider what you need around you today and what you would like to have around for tomorrow.
For example, if you’re planning to have a child in the next few years, you need to look at the quality of the school system and the surrounding amenities (e.g., playgrounds, parks, etc.) for kids.
If you feel too isolated or too cramped, you’ll end up resenting the home and lowering your quality of life.
Mistake #5: Letting Your Emotions Get in the Way
Despite what you may have seen in movies, buying a home is more than just a gut feeling you get when you first drive up to the property. As tempting as it can be to let your feelings drive the purchase, you need to think about it as a business decision.
While this home may look like the sanctuary you’ve always dreamed of, it’s not the right choice if its practical benefits are few and far between.
Mistake #6: Neglecting Due Diligence
It’s easy to let yourself be drawn into marketing spiels and empty promises when it comes to looking for a loan. Not only is it convenient to believe such propositions without research, but it also saves you a lot of time — something you’re certainly lacking when you’re trying to button up the details of a home purchase.
Take the time to speak with a broker, who can provide you with a wide selection of loan options and help you with the legwork of completing due diligence to avoid missing out on the real opportunities available to you.
Mistake #7: Getting One Rate Quote
The Consumer Financial Protection Bureau reports that close to 50% of all borrowers fail to shop around for their loan. That’s half of all buyers who didn’t at least try to get the best deal on what is likely to be the most expensive purchase in their life.
The reasons for this are understandable, but this does not make those excuses acceptable. The right loan can save you tens of thousands of dollars over the course of 15 or 30 years.
A Shore Financial broker can make the process easier for you, as they can provide you with a list of all the rates and options that are most suitable for your scenario.
Mistake #8: Looking into Properties before the Mortgage
Buyers shouldn’t look at properties before they’re pre-qualified or pre-approved for the loan. What may start out as harmless fun visiting open houses on the weekend can quickly turn into an attachment to a home that you can’t actually afford.
Before you let it get that far, talk to a Shore Financial broker first. Those just getting started may want to seek out a pre-qualification, but serious buyers should really take the plunge with a pre-approval.
Mistake #9: Overlooking Other Expenses
Home maintenance, property taxes, emergency repairs: not everyone realises just how expensive upkeep and ownership can be. Homeowners who put off repairs because they don’t have the money not only endanger the integrity of the home, they can also put the safety of the residents in question.
For example, a flickering light could signal that the wiring needs attention before it causes a fire.
There are so many reasons to buy a house right now, especially considering that property prices have been sliding down. These trends won’t continue forever, so it may be time to strike while the iron is hot.
But before you do, knowing the common mistakes first-home buyers make can be a great way to spot them before they happen.
If you don’t want to be stuck overpaying on your loan, it may be time to talk to an expert at Shore Financial today. Don’t sign up for the wrong loan when you can explore your options long before the deed is transferred.
Disclaimer: This is general information only and should not be taken as financial advice. Please speak to a Shore financial planning professional before making a decision on your home loan.