Top 10 Mistakes New Home Buyers Make
For many years throughout the 90’s and early 2000’s, real estate went up dramatically and everyone wanted a piece of home-ownership. Unfortunately, the real estate bubble burst in 2008 and 2009 showed the dark side of home ownership. Still, owning a home is one of the best things you can do to build wealth, and many want to own a home to have a place to settle down. Read on for the top 10 mistakes new home buyers make so you can avoid them and make home-ownership a positive experience.
- Stretching to get into a house: If you can’t quite afford your house payments, this could become a problem for several reasons. First, a minor financial blip- such as a lost job- could cause you to be unable to pay and send your home into foreclosure. In addition, you may not have the money to make necessary repairs and the home could fall into disrepair and decline in value
- Not understanding your mortgage: Many homeowners lost their houses to foreclosure in 2007 and 2008 when their mortgage payments jumped up exponentially and became unaffordable. This occurred for many because they had adjustable rate mortgages they didn’t understand. Make sure you completely understand the terms of your mortgage and what your monthly payments will be. Generally, the safest option is a fixed rate mortgage in which your payments stay the same for the entire term of the mortgage.
- Not having an emergency fund: Homes are a wonderful thing, but they can also have problems. A leaky roof, a furnace that breaks or a flood in the basement can cost you hundreds if not thousands of dollars. If you don’t have an emergency fund, these realities of home ownership an become huge issues.
- Not working with a realtor: A real estate agent is an expert in the housing market and can guide you though the entire buying process from finding a home to making an offer. If you don’t use a realtor you may miss out on seeing homes that were a better deal. Likewise, you may make an offer that is too high or overlook something about a property that an expert would have caught.
- Not researching property values: You don’t want to pay too much for a property or pay more than it is worth. Find out what similar properties are going for and make your offer in line with those.
- Not getting pre-approved for a mortgage: Before you begin shopping for a house, you should go to a mortgage lender with your financial data and find out how much they are willing to lend you. Not only does this make the process quicker when you actually find a house, but you also won’t waste time and energy looking at houses that are outside of your price range.
- Falling in love with the first house you see: It can be easy to get caught up in the excitement and think you have found your dream house. Still, if you don’t look around first and explore all your options, you may regret it.
- Not researching the neighborhoods: Location is often the most important factor in what happens to the value of your property. Find out about the school district and what the neighborhood is like before you buy.
- Misunderstanding the realities of home ownership: With home-ownership comes responsibility. Not only will you have to foot the cost of repairs yourself, but you will also be responsible for landscaping, lawn mowing, gardening and all the other things apartment-dwellers don’t have to worry about. Furthermore, you can’t just pick up and move when you have a house.
- Assuming property values will always go up: For a long time, it was believed that your home was a source of instant wealth. When the real estate bubble burst in 2008 and 2009, many homeowners got a harsh wake-up call.