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6 Costly Mistakes To Avoid When Buying a Home
We all know that buying a home is one of the most significant decisions we will ever make. But, when purchasing a home, there are a lot of things you should consider: the neighbourhood you should choose; how much house do you want; and last but not least, what does your house need to make it feel like home?
But, answering these questions is not an easy task. When buying a home, there are e lot of financial uncertainties that only add to the overwhelmed feeling. Luckily, you can avoid these critical mistakes by not damaging yourself financially.
1. The first mistake you should avoid: Outspending your budget
Before you start buying a home, it is imperative to know how much a house you can afford.
One of the most significant rules is to allocate 30% of your budget to home-related expenses. Those expenses include insurance, taxes, maintenance, and utilities. That 30% target should also include the down payment and closing costs.
Before beginning the home-buying process, it's crucial to create a thoroughgoing budget that considers all recurring and one-time costs related to homeownership. Your budget can help you point on how much house you can truly afford and which neighbourhoods you can target. It may also prevent you from overbuying and becoming in lack of cash later.
2. Another mistake you should avoid: Overlooking mortgage options
While you are managing your budget, you should also ask for financing preapproval if you plan to take out a loan for your property. A loan manager can be the one that will show you the total amount of a loan you are qualified for, how much you will pay in interest over the life of the loan, and the calculated amount of your monthly mortgage payments.
Unfortunately, many homebuyers top at the first loan offer they receive without looking around first. Other lenders might offer lower interest rates or the possibility for an early mortgage payoff. If you're considering a VA or FHA loan, you should ask the lender to compare the numbers against a traditional loan.
3. Working with the wrong agent is another mistake you should avoid
Real estate agents should keep in mind your best interests. You should choose a qualified agent who has worked widely with buyers and has a lot of experience. Your real estate agent can help you find the perfect house suitable for your physical and financial needs. If an agent is consistently pushing you to go over your intended purchase price, it would be best to consider a different agent.
4. Choosing wants over needs
Sure - that extra living space or oversized garage is great to have, but is it indispensable? It is easy to get a start in the home-buying process and forget that it might cost much more than what you need. Before you start looking for a perfect home, you should make two lists: one titled 'a must-have' and the other titled 'nice to have.' It would help if you looked up these lists regularly as you are looking for your perfect future home.
5. Skipping the due diligence process
The fundamental principle in home-buying is always to get it in writing. An offer to purchase a home is a lawfully binding contract, and that contract should be as detailed as possible before you sign it. If the seller agrees to do these things, don't ever rely on a verbal agreement or a handshake. Instead, have your requests written into the contract.
6. Abandoning the home inspection
Forgoing a home inspection can also be attractive, especially since the average inspection costs can set you back a pretty penny. However, inspections frequently turn up possible problems home buyers really can't see, such as incorrect installation or termites. Spending that money before buying a home could prevent significant expenses later.
Take your time and do it right
As you begin the home-buying process, a financial adviser can help create a budget and make sure you're not buying what you don't need. They can also help you and show you how buying a home might impact your savings. Taking the proper steps before buying the house could save you much more in the future.
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If you enjoyed this post and have time to spare, why not check out these related posts and dive deeper down the rabbit hole that is real estate.
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- Why South Africans Are Buying A Property in Malta
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- A Foreigners Guide to Buying a Thailand Property
- How To Buy Property if You Are A Non-Filipino
- How Do You Know A Property is Priced too High?