Buying a home for the first time can be a scary and exciting experience, and it’s easy to get in over your head if you’re not careful. There can be a lot that goes into buying a home, and to keep from getting overwhelmed and making a huge mistake, check out these 3 great tips for avoiding the most common mistakes that first time home buyers will typically make. You’ll find yourself more confident, prepared and more able to keep from making some potentially costly mistakes. After all, your first time home investment could wind up being a bad decision that could follow you for years if you overlook some of these common facts about home ownership.
Searching for Your Dream Home without Getting a Financial Checkup
We get it, it’s fun and exciting to go look at potential dream homes, and you can look at them all day long, but then you could get your heart broken when you find out you can’t afford it. Instead of starting out with the fun part, get yourself per-qualified for a loan to find out what you can afford. Instead of just randomly choosing a price range and looking for homes in that area, talk to your lender about what you can reasonably afford, taking into account all the other bills and payments on your new home (such as taxes, insurance, mortgage insurance and any others) that will come into play. Also, while you’re there, talk to your lender about what kinds of financial documents will be needed before you get that loan so you can start getting them together. Once you have a pre-approval letter you can create a realistic budget for your home search.
Thinking of the Purchase in the Short Term
It’s easy to get so carried away with the new home search and excitement of finding your dream home that you don’t take into account some important information about the neighborhood you would move to, future developments in the area and potential resale value of the home. When buying your first home, you likely aren’t thinking about resale value, but in this real estate market, you should be. Keep in mind that in five years, you may be in a completely different place than you are now, and you need to keep in mind that you may need to sell within the first five years of buying your home. Also, take a good and honest look at the neighborhood the house is located in, and any developments that may be coming soon. If the neighborhood is undergoing any time of redevelopment or stores and shopping are coming in nearby, the value of your home could increase in the near future, making the house a good investment. Alternatively, if you buy an older home in hopes it will appreciate in value, keep in mind your investment may not pay off like you think it might.
Making an Emotional Decision
It’s easy to get emotional about buying a home. You may fall in love with a home out of your price range, find there is already a contract on your dream home, or not look clearly enough at a house to see the dangers lurking beneath. You have to be able to separate emotions from logic before signing that contract, and things like leaky basements and creaky floorboards may mean you’re in store for some big investments in fixing up your dream home. You want to make sure you’re investing in a home that will offer a good return on your investment and has a good resale value.
One great rule of thumb is to always talk to real estate agent about what you’re looking for, where your finances are at, and any advice they have for first time home buyers. A real estate agent can keep you looking at houses in your price range, help you find out what kinds of monthly costs you’re looking at with each house, and what pitfalls to look for with each house you view. Realtors can point out some things you may not see or notice on your own that could be signs of danger or money pits. Get as much advice and help from your real estate agent and lender as you can. That’s what you’re paying them for…their expertise.
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By Jeffry Evans – I write about and research real estate licenses. Find real estate agent resources and if you’re doing properties in multiple states see if there’s a reciprocal agent license agreement here: http://www.realestatelicense.org/real-estate-license-reciprocity.html.