Most First-Time Home Buyers are Suckers…Don’t Make these Mistakes

Every homeowner is a first-time home buyer at some point in their lives, and most of us tend to make the same mistakes. A home is a big investment, and it is important that you make the right investment without making too many mistakes. One of the biggest mistakes many people make is doing a private sale instead of going through a realtor. For instance, when you are looking for Marblehead, MA real estate, it is best to let someone with experience help you choose the right home. Not having a realtor is just one of many mistakes that first-time home buyers make. Here are some more that you will want to avoid.

Buying a Home You can’t Afford

That dream home that costs several hundred thousand dollars may be incredible, but can you really afford it? Before you even start looking for your first home, make sure that you carefully plan your finances and have a firm budget in place. Don’t even look at homes that are outside of this budget, unless they are only a bit more expensive or they have a feature that you really want (even then, it may be best to wait and install the feature later when your cash flow is better).

Not Looking to the Future

Many people buy homes thinking that these homes are just stepping stones to something better. What they don’t realize is that when they are ready to move on, they may not have an easy time selling their homes so they can step up to something bigger and better. When buying a new home, plan to be there for at least five or more years. If you are planning on expanding your family, you will also want to factor that into your decision, because you will need more space.

Not having Money for Closing Costs

In addition to the down payment, you also need to have money for closing costs. These can include legal fees, realty transfer fees, title insurance, etc. Expect to spend about 3% of the purchase price on these expenses. It is best to save this money separately rather than include it in the mortgage, because your payments will be lower in the long run.

Buying a Home without Stable Employment

This goes right along with the budget. If you do not have a job that you plan to still have many years from now, or you are unemployed, this is not the time to go looking for your first home. Wait until you are more settled. After all, you could end up taking a job that will require you to move, and you could be stuck with a house that you can’t sell and that you won’t even be living in.

Not having Money in the Bank

If you don’t have enough money to pay at least six months mortgage and other bills, you aren’t ready to buy a home yet. There is a lot more to buying a home than just taking out a mortgage. In addition to your mortgage payments, there are going to be many other expenses, including insurance, property taxes, and repairs/maintenance. Insurance and taxes may be included in your mortgage rate, but remember, this means you have to take out a larger mortgage to cover these expenses.

Not having a Sizable Down Payment

While your lending institution may offer a mortgage at a low rate with a low down payment, it is best to pay as much as you can for a down payment. You should pay at least 20% of the cost of the home. If you pay less than this, you will end up with a higher mortgage payment every month.

Image Source: Steven Martin