Typical mistakes home buyers make?
When you buy a home for the first time, you’re bound to make some mistakes. Real estate agents and brokers tell me that first-time buyers tend to make the same mistakes over and over again. Here’s a Top-10 list that should give you a sense of which mistakes are made most frequently so you can avoid them.
Top 10 Mistakes:
#1 — Incorrectly timing your move.
If you’re renting, you’re probably committed to being in your rental unit for the next 12 months. If so, the best time to buy is when your current lease ends, so you’re not paying rent at the same time you’re making your monthly mortgage payment.
If you expect to buy in the next 12 months, don’t sign another long-term lease. Instead, ask your landlord for a month-to-month lease or a 6-month lease. If that’s out of the question, agree to sign a 12-month lease if the landlord will give you a 60-day out clause. That means with 60-days notice, you can vacate your rental unit without penalty.
#2 — Looking at homes you can’t afford.
If you don’t know how much you can spend, you could wind up looking at homes that are out of your price range. The problem with doing that is that nothing you can afford seems good enough.
First find out how much you can afford to spend, then start looking at homes that fit your budget.
#3 — Buying the wrong size home.
There’s an old joke in the real estate world: If you want to get married, buy a studio!
Seriously, many first-time buyers don’t think about where they’d like to be personally in 5 to 7 years. If you’re hoping to be married within that time frame, don’t buy a home that’s too small for two. If you’re married and hoping to have children, don’t buy a one-bedroom condo.
If you outgrow your home before it has appreciated enough to cover your closing costs, you could wind up losing money on your purchase.
#4 — Buying in a neighborhood you know nothing about.
You can fall in love with a house, but if you don’t like the neighborhood in which it’s located, you probably won’t be happy living there.
Take the time to get to know a neighborhood before you buy. Otherwise, every time you go through it to get to your home, you’ll regret your purchase.
#5 — Operating on a first-house-is-best basis.
If you’re leaving behind a cramped, one-bedroom rental, almost any home will look good. But don’t jump at the first house you see. Take the time to do your homework, get to know the housing stock in a neighborhood, and see plenty of homes before you make your decision.
#6 — Buying a property that’s difficult to resell.
Although you may not mind that your house backs up to the train station, it’s unlikely you’ll be able to easily persuade another buyer how nice it is. Always think about how tough it will be to resell your home before you buy it.
#7 — Overextending your budget.
Lenders may tell you that you can afford to spend up to 36 percent of your gross monthly income on your mortgage, taxes and insurance, but that doesn’t mean you’ll want to go that high.
Spending 36 percent of your gross monthly income can feel more like 50 percent of your take-home pay. If you don’t want to dramatically alter your lifestyle once you buy a home, take the time before you buy to figure out what you spend in a given month so you know how much or little you’ll have left for your mortgage payment.
#8 — Not knowing the neighborhood before you make an offer.
Walk around. Shop at the local stores. Chat with prospective neighbors. See who goes in and out of the schools. Drive the commute. Visit local houses of worship. This is how you get to know a neighborhood and find out if it’s the right place for you to set down roots.
#9 — Don’t leave yourself unprotected.
Make sure your contract has the right contingencies and the right language so that you’re properly protected. Hire an agent with experience, so that you have an advisor who only vested interest isn’t seeing the deal close.
#10 — Having unreasonable expectations.
If you’re buying an older home, understand ahead of time that it won’t be in perfect mechanical condition forever – it will have problems. If you pay list price (or above list price in an active seller’s market), you may feel like your home should be perfect because you’re paying top dollar for it.
But that’s unreasonable. If you expect perfection in an existing home, you’re likely to end up disappointed.