It may be the first of many moves for you, or it may be the one and only, but either way, when you have never bought a home before you are susceptible to oversights and mistakes. Waypoint Real Estate Group is here to guide the first time home buyer through the process, but there are certain steps you simply must take yourself to make sure you are satisfied with your new investment. Let’s discuss some first time home buying mistakes and what you can do to avoid them.
Mistake 1
Overestimate your buying power. As a first time home buyer, it’s easy to think you’ll be able to afford a little extra, but when those zeros start to add up you might not realize exactly what you are getting into.
Solution: Make a budget and stick to it. A monthly budget is a good place to begin. Budget your income (wage and investments) verses all of your expenses, from food to doctors appointments and luxury items. After you’ve looked at your monthly budget remember to calculate in additional yearly items such as vacations, holiday expenses etc. Carefully analyze your spending and see if there are habits you could cut back on. When you take a close look you may realize that you’ll save more than you thought by eating at home or making your own coffee. If you take a hard look at your budget and think you’ll be cutting it close, than consider saving a bit longer before investing in a new home. Keep in mind that emergency-spending situations (doctors visits, car accidents, vet bills etc.) could come up at any moment and you will want to make sure you have savings if you need it.
Mistake 2
Forgetting what is really important to you. A first time home buyer can easily become distracted by unnecessary upgrades, It’s important to remember what home features are most valuable to you and keep that in the front of your mind.
Solution – Make a list of priorities and keep them practical. How many bedrooms do you need? Is a garage a must? Is the school district important to you? What crime rate are you comfortable with? Order your priorities and keep them somewhere obvious whenever you are looking at houses. Don’t forget what is most important to you, no matter how cool that hot tub is.
Mistake 3
As a first time homebuyer you will be tempted to use your current rent payment to gauge your mortgage capabilities. There are a lot of things your landlord covers right now that you might not have considered.
Solution:Plan a healthy savings. Set aside a sizable savings account for household maintenance. Whether it is painting, plumbing or a new washing machine, costs that are simply included as a renter add up as a homeowner.
Mistake 4
Bad Credit. It happens and is sometimes a big hurdle for the first time home buyer.
Solution: If the truth is that you have a somewhat ugly history of ignoring your bills than your purchasing options may be more limited. A credit score is designed to help lenders make quick decisions, they will not take the time to talk to you personally and see that you are a nice guy. What you can control however is mistakes on your credit history. Once a year you are entitled to a free credit report from AnnualCreditReport.com. Run the report and double check the information that comes up. Take the time to dispute any false information and repair your credit history. If you need more time to improve your credit before you can purchase a home check out these tips from Experian on how to repair your credit.
Mistake 5
Not doing your research. Buying a house isn’t just about looking into the home you are interested in. It’s also about researching market trends and understanding when it’s best to make an investment. For a first time home buyer, a little knowledge can go a long way.
Solution: Do your homework. While expecting to understand all of the ins and outs of the real estate market quickly is unrealistic, keeping up with the trends is reasonable. There are many major factors to consider when purchasing a home aside from your own personal finances. These include supply and demand, interest rates, consumer confidence and the state of the overall economy. As a first time homebuyer you are at an advantage because you are not juggling the sale of your old home while trying to acquire your new home. Take advantage of this and learn patience with the market. Wait until the market becomes a buyers market, but don’t wait too long! Prices can shoot back up quickly and these changes can be hard to predict. To keep in touch with market news, turn to local area real estate blogs and investment blogs such as Calculated Risk. Also keep your eyes on the local market so that you have information to use when it comes to the negotiation table down the line.
Waypoint Real Estate Group is here to ensure the success of the first time home buyer. If you have questions don’t hesitate to ask. Navigating the real estate world for the first time can be overwhelming, but we are here to make sure everyone succeeds.