Buying a home especially for first timers is not a walk in the park (yeah, I threw you a cliche phrase…). During an interview one of our inspectors stated it best “buying a home is one of the most important investments in any one’s life”. You will be forgiven for assuming that getting a pre-approval stamp from a mortgage lender already gives you a green light to go ahead and start signing deal papers with the seller (or any other seller for that matter…). There are so many mistakes that home buyers, including the “experienced ones”, have been known to repeat time and again. You should have a look at the 3 most costly mistakes explained in this article and (cliché alert…) “avoid them like the plague!”
Yes, buying your first home or any other subsequent home after that is always exciting. But you should be careful not to be caught up in the frenzy. This is serious business and any small loop hole could fast leave you in debt or worse… covered up to your head in lawsuits. So what are these mistakes that you should avoid as a home buyer?
#1- ACTING OUT OF EMOTIONS: It’s not about what your heart thinks… get your financial facts right…
Of course buying a home is going to be one of the most emotional things you’ve ever done in your life; but don’t let that cloud your judgment. Some people think that they should get everything new for their new home… new furniture, hold up, stop… that’s your heart doing the thinking! Some will go to the dealership and get a new car to match their new home… again that’s a No-No!
Next, you will want to make sure that you find an inspector with positive reviews online (ahem!). A home inspector that is really worth his salt can definitely help you avoid unnecessary headaches in the future by making sure that you know exactly what is going on with a house when he inspects it, for the better or for the worst! You may find out that your “dream home” isn’t so dreamy after all. That’s just the way it goes, though, you’ll be much happier in the long-run.
So they told you that you qualify for the mortgage? Well, what they forgot to tell you is to keep your wallet shut until the deal is done. Did you know that adding more debt to your credit could jeopardize your home buying deal? Yes, mortgage lenders will quickly throw you to the “see you later” section if they find out that you have more debt like furniture or car purchases heaped on your credit.
Another thing is for you to think at least 5 years ahead and determine whether you’ll still be in that house or you will need to move (it could be because of your job). Do not be influenced by the “market”; but still, don’t wait too long for the right time to come. All these are decisions that require a level head, not emotions. Michael Yardney has compiled an amazing list of 13 things you should avoid as a home buyer. Emotions can lead to bad mortgage choices, buying out of desperation, overspending… you name it. Here’s what he says:
13 Common Mistakes Home Buyers Make – and how to avoid them
Buying your next home can be a daunting task, especially if it’s your first home.
It’s exciting but full of complexities.
While it’s likely to be the largest financial transaction you will ever make, we’ve found that many home buyers are poorly prepared to ensure they make a good purchase decision.
And it’s not their fault.
The system is stacked against them, with much of the power being on the side of the seller.
To help guide you, let’s look at 13 Common Mistakes made by Home Buyers – ones that you should avoid… checkout mistake #6
#2 OVERLOOKING THE IMPORTANT PARTS OF THE DEAL: Don’t cut corners… And you need Professionals in your corner!
First things first… the most important part of buying a home is not buying the house, its finding the right agent, the right house, the right inspector, a damn good lawyer and doing everything by the book! You should also know the reasons why you are getting the inspection done, know what they are looking for and what questions to ask. Doing this without a good team of professionals backing up your decisions is suicide! First time buyers don’t really know who they’re dealing with or how to go about hurdles. Collect a few references and seek advice from two or more professional to get their honest opinions.
The bankrate dot com website has highlighted some pretty interesting facts on following the right channels and why you need to hire professionals when buying a home. This one article by Polyana da Cost a is a real eye opener. However, it’s one of the comments from one of the visitors on this post, (@comment_comment_comment),that really raised my eyebrows. Remember, it’s more than just paying for your mortgage. Check this out:
5 first-time homebuyer mistakes
“People generally don’t like renting because they feel that they are throwing money away, but let’s crunch the numbers.
For a $300,000 home:
Mortgage rate: 5% (higher for right now, but considered a steal 20 years ago)
Down payment of 20%: $60,000
Mortgage Term: 30 years
Total cost of Mortgage: $463,814
Money lost to Interest: $223,814
Money lost in Property Taxes @2%: $180,000
Total amount lost: $103,814
Now let’s say instead of purchasing a home with your down payment, you decide to rent and invest the down payment instead.
Investment Contribution:$60,000 initial + $500/mo that would be paid in property taxes
Total cost to rent over 30 years: $450,000
Investment earnings at 8%(average stock market earnings): $1,341,323
Net Value: $891,323
Obviously home prices generally increase over time (as does rent), but the point is it isn’t cut and dry. It will cost you money to live somewhere regardless. The real question is: do you want to invest in Real Estate or the Stock market?”… find out more on avoiding silly mistakes
#3 NOT DOING YOUR HOMEWORK RIGHT: Buying a home is not like picking candy at a store…
Ok, so you think you just found your dream house? But is this enough to go on when making such an important life decision? Another thing that should immediately come to your mind when you’re out there looking for a house is that you are not just buying the house… you’re buying everything that comes with it. Available public infrastructure, the neighborhood, transport, social amenities… everything!
Bob Sokoler and his team (the Medley Sokoler Team) decided to shed some light on this issue through a very creatively done and informative video on the mistakes home buyers must avoid especially when it comes to doing their homework. The second tip will get you going “Oh, is that so…?”:
10 Home Buyer Mistakes You need to AVOID! Tip 2 Do your homework!