When
buying a new property, buyers tend to make mistakes brought about by too much
excitement. However, having access to all the right tips and knowing how to
apply them can ensure that you will not overstretch yourself the next time you
are in the market for a house.
While buying a home is an exciting process, emotions often take over when you
believe you have found your dream house. Nevertheless, it’s imperative that you
clearly assess the situation at hand and that you let the head make all the
decisions and not your heart.
Buying a house is a big purchase decision; you need to make sure it’s the right
one. Below is a look at mistakes to avoid when buying a house to ensure you
will not overstretch yourself.
1. If Planning to Move Soon, Don’t Buy a House
For renters, it’s always frustrating having to write a check each month, and
then having no home equity to show for your efforts come year-end. But then
again, if you aren’t sure you will remain put for the next few years, then it’s
not the right time for you to buy.
Some choose to invest in a house fully aware that they intend to relocate in a
few years. Home equity or not, you shouldn’t purchase a house and automatically
assume you will get to sell or lease it out when you decide to move again.
Pro Tip: If you intend to invest in an area that doesn’t have a strong renter’s
market that can allow you to cover
the mortgage when you move, then consider sticking with the rental for now.
2. Don’t Surpass Your Budget
House shopping can easily make a person giddy. Often, you will find that there
are too many appealing choices. You may also encounter realtors who will tell
you that for a little more, they can find you a house with an office nook and
granite countertops.
The search for a house will see you dealing with all kinds of large numbers,
such that it may not seem like a big deal to stretch the budget by another
$5,000 or even $10,000. As much as you want to get the home of your dreams,
this is one fame you shouldn’t play.
It’s common for buyers to consider the top parts of their monthly income when
determining how much they can afford. Such buyers fail to consider what’s
likely to happen if their income gets affected, or time comes for them to
switch jobs.
If you aren’t sure how much to spend on a house, you should use an online budget calculator.
Pro Tip: Always ensure you’re preapproved for a home mortgage. Preapproval
shows the seller you’re keen on buying a house, and also lets you know how much
you can afford to spend on it.
3. Don’t Overlook the Additional Costs
Purchasing a house isn’t merely a matter of replacing your monthly rental
payments with a fixed mortgage payment. You also need to account for the
utilities, property taxes, and accompanying maintenance costs.
It’s common for buyers to forget about insurance and property taxes when
considering the amount, they can afford to spend on a house. In some cases, the
monthly payment may end up being outside your price range once you factor in
all the additional expenses.
Pro Tip: Inquire from the homeowner on how much they spend on property taxes
and utility costs on average. While at it, make sure to get a quote for your
home insurance and also budget at least one percent of your annual income to go towards home maintenance.
4. Don’t Assume a Brand New Home Means You’ll Get a Brand New Everything
Many first-time homebuyers purchase a new house, and then look at the ratty
vehicle sitting in their driveway, and immediately decide to buy a newer model.
Others find they now have a formal living room, but don’t have the furniture to
go with it, and thus shop for some!
Feeling as though you need to upgrade all your items for them to match the new
home is a costly mistake you will need to avoid. It doesn’t make sense for you
to get into tons of credit card debt just so that your items can match the shiny new home.
Pro Tip: The only way to figure out what you need is to start by living in the
house for a little while. Once you know what you need, start saving for it.
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