Buying Your First Home? Don’t Get Trapped
Congratulations, you’ve decided to become a first-time homeowner! It’s a big decision, and you’re probably feeling incredibly excited, and equally stressed out and scared. Buying a home is a big decision, and an even bigger purchase. Until you buy another house, it’ll most likely be the biggest purchase of your life.
It’s easy to get carried away in the moment, and let all of the excitement and emotions rule your decisions and your head. But, you’re still going to have nagging thoughts and doubts, and you might be wondering if you should really sign on that dotted line and become a homeowner.
Avoiding the Common Traps
Buying your first home will always be a little scary. It will probably be just as scary if you end up buying another home. Deciding to buy a home is a huge decision, and it’s not one that you should make lightly. Don’t let your emotions rule you. There are several traps that can pull you in and make you pay a lot more money than you should, or get into a house that’s not right for you, for a number of reasons. Fortunately, they are easy to avoid, and it just takes a calm head, informed decisions, and a trusted real estate agent at your side never hurts.
You’ve fallen in the love with the house, and now you really want it. The price seems like it might be a little steep, but you don’t care. You have to have this house. It’s your first home, so you want it to be perfect, and it is. Except for the price. Don’t get trapped by overpaying.
You’ll want to learn the fair market value of the house before you make an offer. Appraisals can help, but they’re not always accurate. They can be subjective. You’ll want to learn what the rest of the housing market is like in the area. Learn what other houses have sold for, and how they compare to the house you are looking at. You don’t have to do this alone.
With a trusted, local real estate agent helping you, you can make sure you find the best price for the home. The agent will know the market, and have a good idea of what a fair market value would be. Your agent is there to help you. They want to find you the best deal, save you some money, and get you into the house of your dreams. So let them.
Overstretching your money
You have the mortgage, and you know what your monthly payments are going to be. That’s all there is to it, right? Unfortunately, it’s not, and this is another trap that you’ll want to avoid. The mortgage is only a part of the picture, and just one of the costs of buying, moving into, and owning your first home.
While you can add some of the costs to your mortgage, like closing costs, title fees, and homeowner’s insurance, not all of the extra costs are rolled into the mortgage. And, while you can add those previous costs to your mortgage, you will be paying interest on them. What you can’t include in your mortgage are moving costs, utility costs, and if there are any homeowner association fees (HOAs).
And, interest rates change everyday. When you were first preapproved, rates were low. But your interest rate isn’t locked in until you close. If an increase of the interest rate will cause you to struggle with the payments, you might need to reconsider how much you are willing to spend on a house.
Not having a home inspection
This is a big one. Never fall for the trap of not hiring a home inspector. Sure, you have to pay for it, and it’s not necessarily cheap, but it creates a safety net for you. If you go into a house without an inspection, you’re stuck with any of the potential problems. If a home inspection turns up something major that has to be repaired, you can negotiate for the seller to fix it, lower the price so you can fix it, or you can simply walk away. The inspection lets you know the condition of the house, and if there’s too much wrong, you don’t get stuck with a house that’s unsafe to live in, and you are unable to afford to do the repairs.
Having everything ready
This is the biggest trap, and it should be the first thing that you do. You don’t want to struggle trying to get a mortgage because you were blindsided by a low credit score, or because you didn’t have your tax returns ready. There’s a lot of information that the lender will need, so have all of that ready. Even better, get pre-approved for a mortgage. That way, you just have to finalize the loan after you find a house, and you already know the upper limit of what you can borrow, and what you can afford.