Be aware of common mistakes that can jeopardize your ability to buy, apply for a loan, or cost you more money in the long run when buying your own first home
Buying your first-ever home for the first time is a dream come true for almost all of us, sometimes nerve-wracking and exciting because it’s going to be the most significant spend of your life. That is why it is heartbreaking to see some first-time homebuyers make mistakes that can impact their ability to buy, apply for a loan, or cost them more in the long run.
So if you are planning to buy a home for the first time, check out below common mistakes we have compiled for you to avoid.
1. Looking for a Home Before Getting a pre-approval
It is important to get a pre-approval to know how much exactly you can spend, or else you will miss out on that perfect house you have been eyeing because you don’t have your budget in order. Pre-approval defines your borrowing power, determines your monthly payments, and aids your search for a home within your budget. A pre-approval is simply a loan amount for which the lender has agreed to lend you money to help you buy a home.
2. Not Understanding other Hidden Costs of Buying a Home
This is a common blunder made by first-time homebuyers. Purchasing a home entails more than just the buying price; you must also comprehend and be aware of additional hidden expenditures so that there are no unpleasant surprises later. It is critical to add an additional 5-7 percent to the buying price to help cover you. The following are some of the additional charges to be aware of (note that not all of the costs listed below will apply to your situation):
· Loan application fees
· Valuation fees
· Lenders Mortgage Insurance (LMI)
· Builders insurance
· Building, pest, and strata inspection
· Moving costs
· Solicitor fees
· Government fees such as stamp duty and land transfer fees
· Legal/Conveyancing fees
· Removalist charges
· Body corporate fees
· Real estate agent fees
· Connecting gas, electricity and telephone
· New furniture, cleaning costs even renovations
3. Missing out on Grants
Every federal, state, and territory offers various grants, programs, rebates, and incentives to assist first-time home purchasers in entering the housing market. So make sure you do your homework and learn whether you qualify, how much you can receive, how to apply, and that you meet all of the requirements before applying.
4. Not Doing Enough Research
As a first-time homebuyer, researching does not only entail all the costs involved (these include, of course, the hidden charges as discussed above). Failing to assess and research the national and local market, the neighborhood and even the street is a big mistake. It is hard to live in an area if you don’t like (or even love) your surroundings. Remember, knowledge is important in finding the key to the right property for the right price.
5. Getting Too Emotionally Attached
Because of its lovely furniture or styling, it's simple to fall in love and become emotionally attached to a place. Allowing these factors to influence your judgment is not a good idea. Focus on the big issues that will affect your lifestyle, don't become emotional, and don't go overboard with your spending. It's more difficult to weigh the real benefits and drawbacks of a home when you're emotionally invested in it.
6. No Budget and No Additional Savings for Your Property
Before going house hunting, first-time buyers should have a firm grasp of their budget. Plan ahead and save at least 20% to 25% of the property price, taking into account all potential hidden costs, deposit fees, and interest rates. Calculate your future expenses and add them to your monthly budget after you have a decent sense of how much they will cost. You should also make sure you have enough savings to cover the additional costs that come with buying a home.
7. No Steady Income or Stable Employment
Let's face it: the truth isn't pretty. You'll need to show that you can make regular mortgage payments in order to get a home loan. This entails a consistent income, genuine savings, a clean credit history, few debts, and a secure job.