Buying your first house is an exciting milestone, but it can also be a daunting and complex process. First-time homebuyers get caught up in the excitement and make the same four mistakes during the buying process.
Don't get so caught up in the thrill that you regret your decision to buy your first home. These mistakes are easy to avoid if you know what they are.
This article will show you how to avoid those mistakes.
4 Common Mistakes To Avoid Buying Your First House
Mistake #1: Buying Too Big ($$$)
One of the most crucial steps in the home-buying process is understanding how much house to buy. Chances are your first home won't be your “forever” home, so avoid going overboard buying too big of a house.
Many first-time buyers make the mistake of underestimating the financial aspects of homeownership. To avoid this error, follow these steps:
a. Size Matters: Over-extending yourself with your first home is a recipe for disaster, and far too many fall into this trap. With low inventory and high prices, this problem is all too common.
b. Set a Realistic Budget: Determine how much you can comfortably afford for a down payment, monthly mortgage payments, property taxes, homeowners insurance, utilities, and maintenance costs. Use a mortgage calculator to estimate your monthly payments accurately. To avoid Private Mortgage Insurance (PMI), try to put at least 20% down.
c. Get Pre-Approved: Getting pre-approved for a mortgage is a critical step when buying your first house. It not only helps you understand your budget but also demonstrates to sellers that you are a serious buyer. This step can give you a competitive edge in a competitive housing market. Also, knowing your credit score and improving it (if necessary) will help you get approved for a home loan with good terms.
Mistake #2: Overlooking Location Considerations
The phrase “location, location, location” still holds true in today's real estate market. Choosing the right location is just as important as selecting the right home. Here are some location-related mistakes to avoid:
a. Ignoring Your Commute: Consider your daily commute to work, proximity to public transportation, and accessibility to essential amenities such as grocery stores, schools, hospitals, and recreational areas. It can be tempting to buy a house away from the city but don't forget to calculate how much time and fuel it will take when you run errands.
b. Not Researching Crime Rates and Property Values: Research the neighborhood's safety, crime rates, property values, and future development plans. Online tools, local forums, and conversations with current residents can provide valuable insights into the neighborhood's suitability.
c. Failing to Consider Future Growth: Think about the long-term potential of the area. Is the neighborhood up-and-coming? Are there infrastructure projects or new developments planned? Buying a home in an area with potential for growth can be a smart investment. For instance, getting in early in a new housing development can be a wise long-term financial decision.
Mistake #3: Skipping a Thorough Home Inspection
Home inspections exist for a reason, and they are an expected part of the process. Skipping a thorough home inspection can lead to costly surprises down the road. Avoid these mistakes related to property inspection:
a. Not Hiring a Professional Inspector: A professional home inspector can identify potential issues that might not be apparent to the untrained eye. Don't rely solely on the seller's disclosure; invest in a qualified inspector to ensure you know of any hidden problems.
b. Ignoring Inspection Contingencies: Ensure your purchase agreement includes an inspection contingency. This allows you to negotiate repairs or back out of the deal if significant issues are uncovered during the inspection.
c. Underestimating Repair Costs: Even if the inspection reveals minor issues, remember that repair costs can add up. Factor these costs into your budget and decision-making process.
However, home inspections won't uncover everything (inspectors can't look inside walls for hidden termite damage, for example). Just because the inspection passed doesn't mean hidden problems won't arise. Always keep an emergency fund available.
Mistake #4: Getting Overly Emotional
The process of buying your first house is exciting, I get it. And this is especially true for first-time buyers. It's easy to fall in love with a property that might not align with your practical needs and financial goals.
Though you might be excited, don't ignore the practical components of how your first house will affect your life. For instance, is there enough storage? Will you be able to house guests when they visit? Also, don't be in a rush. Taking your time to explore what's available can save you substantial costs in the long run.
And remember, you will probably wind up selling your first house eventually. As a result, it's crucial to consider its resale value. Think about the features and amenities that appeal to a broad range of buyers, as this will make selling the property easier in the future.
In conclusion, buying your first home is a significant financial and emotional commitment.
By avoiding these four common mistakes—neglecting financial preparations, overlooking location considerations, skipping a thorough home inspection, and getting swept up in emotions—you can set yourself up for a successful and satisfying home-buying experience.
Remember to approach the process with careful consideration, research, and a clear understanding of your needs and priorities. With the right approach, you can make a well-informed decision that not only fulfills your homeownership dreams but also sets a strong foundation for your future.
Steve Adcock is an early retiree who writes about mental toughness, financial independence and how to get the most out of your life and career. As a regular contributor to The Ladders, CBS MarketWatch and CNBC, Adcock maintains a rare and exclusive voice as a career expert, consistently offering actionable counseling to thousands of readers who want to level-up their lives, careers, and freedom. Adcock's main areas of coverage include money, personal finance, lifestyle, and digital nomad advice. Steve lives in a 100% off-grid solar home in the middle of the Arizona desert and writes on his own website at SteveAdcock.us.