Buying a home is the foundation of the American dream, but that dream can turn into a nightmare if you don’t know what to expect or what you’re getting into. For many first time homebuyers, the task can seem daunting. The process of finding a home and then deciding to buy it is complicated and demands more patience than most of us have. But with a bit of timing and a dash of luck, you can find the home of your dreams. Before you sign anything, be sure you haven’t made one of the top 10 mistakes first time homebuyers make.
10. Ignoring the Property Inspection
One of the most critical moments of the home buying process is the property inspection. It’s also one of the most ignored steps in purchasing a house. Inspection results can put your mind at ease, give you leverage in negotiations, or tell you to walk away swiftly and never look back.
When you ignore or skip the inspection, you could be missing problems with your new home that could cost you big bucks in the future. As a prospective homebuyer, ask your friends and family who they would recommend to use for your own independent inspector and pore over the results in order to protect yourself from a potential hazard.
9. Paying Too Much for the Broker’s Commission
While the broker is an important piece in the home buying game, many people don’t realize you can negotiate their commission rate. Before you get taken to the cleaners, try negotiating a lower rate. In these uncertain economic times, many brokers will give you a deal and work with you. Be confident in your tone and manner, this is a great way to save you tons of money and time.
8. Poor Budgeting
Sounds obvious but budgeting is one of the, if not the most, important factor of home buying. If you don’t know how much you can afford to pay each month, you shouldn’t even be thinking about buying a home. When determining your budget, you should think about long-term costs and include as many incidentals as possible. Factor in property taxes and closing costs, both of which are crucial to understanding how much you can afford to spend. The keys to proper budgeting are planning, an idea of the future, and a methodical attention to detail.
7. Bad Location
Housing in a bad location can have distressing consequences. High crime rates or an unsafe neighborhood can make you feel like a hostage in your home, an awful commute can begin to take a toll on how much you enjoy your home, and declining property values can regret ever purchasing a house to begin with. The old saying goes, when buying a new home you should look at three things: location, location, and location. You may have found the house of your dreams, but if it’s in a bad location, you should probably keep looking.
6. Assuming Foreclosures are Great Deals
Just because you saw an ad on TV advertising homes for a dollar doesn’t mean you’ve won the housing lottery. The fact of the matter is most foreclosures are the results of irresponsible owners who didn’t take care of the house. Foreclosures usually require intense repairs and come with hidden issues that can make them a real money pit. While some foreclosures truly are a bargain, they are far and few between. Traditional home purchases are your best bet.
Check out part 2 of this article, ‘Top 5 Mistakes New Home Buyers Make’ when searching for the house of their dreams: