Buying your first home is an exciting milestone, but it can also be at times, very stressful. In fact, a survey conducted by Homes.com concluded that at least 40% of first-time home buyers reported that it was one of the most stressful times of their lives. Which is why it’s perfectly normal to have questions and seek out answers from knowledgeable sources.
We’ve done a bit of research for you and compiled a list of three of the most common mistakes that first-time home buyers make, and tips on how you can avoid them.
Buying a home when you have debt
One of the most common mistakes that first-time home buyers make is not paying off previous debt before purchasing a home. Perhaps you have a bit of credit card debt you’re trying to manage or maybe even student loans you’re working on paying off. Consider pressing pause on taking on a huge mortgage until you’ve tackled these debts and paid them down.
Once you’ve paid off any existing debt, some financial experts will recommend you build up an emergency fund, to cover at least 3-6 months’ worth of necessary expenses – and then saving for a down payment on a home.
Buying more house than you can afford
A good rule of thumb to follow, is to figure out what exactly you can afford, before you start taking home tours.
Far too often, first-time home buyers fall in love with a home that extends their actual budget, and end up overextending themselves financially. A mortgage payment you can’t afford puts you at risk of defaulting during tough financial times. It’s also a heavy burden to bear when you have less room in your budget for bills and other expenses.
It’s worth taking a look at your income and understanding how much is coming in and how much is going out on a month-to-month basis. This will really help you understand how much of your income should go towards your monthly mortgage payment.
Miscalculating the hidden costs of homeownership
Before even considering buying a home, it’s extremely important to understand the numerous expenses that come with being a homeowner.
For example, a survey conducted by Bankrate concluded that the average North American homeowner spends about $2,000 annually just on maintenance. Expenses you will need to budget for include things like property taxes, mortgage insurance, homeowner’s insurance, repairs, maintenance, utilities and more!
Not budgeting for these expenses, or being unprepared to take these expenses on can leave you in the red – which is why it’s so important to crunch the numbers and ensure you’re not biting off more than you can chew.
A great way to find the best coverage for your budget is to shop around and compare quotes from different service providers. And make sure you’re prepared to set aside at least 1% of your home’s purchase price annually to cover the costs of repairs and maintenance.
When looking to buy your first home, it’s easy to become swept-up in the whirlwind of excitement and emotions that come with it – but in order to avoid feeling buyer’s remorse, you’ll want to ensure that you know where the pitfalls are, so you can know exactly what to expect.