Here are the mistakes too many first time home buyers make. We’ll also discuss how to avoid making these mistakes yourself.
“I Like How It Looks – Let’s Get It”
While the way the home looks is a factor in what we think of a potential home, especially when creating our first impressions. The mistake is to use the way the house looks when you’re enamored with it as your deciding factor. It leads you to ignore a bad floorplan, a long commute or an undesirable neighborhood. You will literally pay a price for minimizing the long list of repairs that the property needs because you’re blinded by your love for the property.
It is a major mistake to skip a home inspection. It is even worse to have a cheap, unqualified inspector walk through the house. It is also a mistake to rely on a friend to inspect the home when they don’t know everything to look for.
One way to maintain perspective is to visit a number of homes, so that you can determine your must haves versus your wants and be able to rule out a house because it is short in some critical area. Another solution is to determine the ideal neighborhoods for your family and your budget and ask realtors to find homes in those neighborhoods that meet all of your requirements, such as falling within your price range and having the minimum number of bedrooms.
“Our Bank Has to Have the Best Rates”
It is a major mistake to go to your current bank or credit union based on the assumption that they’re going to have the best mortgage for you. They may not be able to give you the best rates on the market because their criteria for determining the interest rate to charge you is different than that of another lender. They may not be able to give you a loan with the lowest fees, the most flexible payment terms or the easiest process for refinancing later. Your current bank may not be able to offer you a loan that includes cash out to pay for renovations to a property. Instead, talk to a Red Deer mortgage broker about your options.
“Let’s Get the Most House We Can”
It is a major mistake to buy as much house as you can afford, even with the tighter stress tests that lenders have put in place. If you find a property that is less than the maximum amount you can afford, you’ll have extra room in your budget for saving for other financial goals, including paying down the mortgage ahead of schedule. Or you’ll have the financial breathing room to weather unexpected house repairs and medical bills without having to go further into debt.
Another mistake is buying a house in an up-and-coming neighborhood because you associate that address with success. When you pay twenty to fifty percent more for the same home that just happens to be in the “right” neighborhood, so much money is going to pay for the property, its tax bill, and the consumption habits set by that community that you’re going to end up unable to build real wealth. Instead, buy a home in a safe neighborhood with enough space for your family’s needs.
Don’t buy a house with a couple of extra bedrooms or living areas in the hope that you’ll use it all. If you plan on another child or Mom moving in, then go ahead and get that extra bedroom. Otherwise, only buy a home with the space you need.