Most of us would agree that buying your very first home is one of the most exciting milestones in your life, but it can also be very stressful at the same time. Your excitement, coupled with the overwhelming amount of new information getting thrown your way, can quickly sweep you away. This leads you to make mistakes that are easily avoidable if you were more familiar with the home buying process. So, to help you gain a better understanding of the process, here are 5 first home buyer mistakes that you want to be aware of in order to avoid:
1. Being Careless with Credit
Before you jump right into searching for your first home, there are a couple of essential factors you need to consider, one of them being the status of your credit report. Before approving your home loan, the lender will analyse your credit report to determine whether you are financially fit to provide timely repayments. If you are someone with a poor credit report, your lender has the right to decline your home loan request, and you will have to say goodbye to your dream home. Therefore, make sure that you have a good credit report before you approach your lender. A good credit report can be maintained by consistently paying your bills and credit card repayments prior to the due date. It might be worthwhile to check with all your service providers for any outstanding payments you might have accidentally missed.
2. Not having an In-depth Inspection
We know how exciting it is when you finally found the house of your dream that tick all the boxes (or so you thought). In this instant, don’t let your excitement cloud your logical judgement, and make sure you carry out a comprehensive inspection on the property before you sign away your money. A house can seem picture perfect from the outside; however, some damages are not visible to the eyes such as structural damages which are costly and sometimes impossible to fix. Therefore, it is an advantage to be aware of all the finer details and imperfections before you enter the long-term commitment, this way there will be no big surprises that can put a strain on you emotionally and financially.
3. Failing to Get Pre-Approval for a Home Loan
Market research is a great way to gain a general idea of your desired suburbs and the type of property you want to buy. However, you should not undertake a serious search until you have spoken with your broker or lender, as they will determine how much money you can borrow based on your personal circumstances. In some cases, the amount you want to borrow may not be the same amount you can borrow, so it is best to get pre-approved for a home loan to eliminate any disappointment. Also note that online borrowing calculators do not factor in your personal circumstances and therefore, will not give you an accurate result. Getting pre-approved for a home loan is also an advantage if you are time-poor because it significantly reduces your options and cuts down your search time. With hundreds of properties on the market, you don’t want to waste your time looking at the ones that are unattainable.
4. Ignoring the Additional Costs
Believe it or not, the price you see on the website is not the price you pay, it is often more! Being a first home buyer, it is easy to underestimate the total cost of purchasing a home when you are experiencing the process for the very first time. Therefore, it is important to consider the following costs that you will most likely incur:
- Solicitor fees
- Inspection costs
- Stamp duty
- Transfer fees
- Cost to repair damages or to renovate the property.
Factoring these additional costs into your budget and desired price range will allow you to undertake a more realistic search for your dream home. Considering this is a long-term commitment for most people, it is also best to factor in the ongoing expenses below in order to have a clear understanding of your future financial situation after you purchase your property.
- Council and water rates
- Internet and other subscriptions
5. Being too picky
Lastly, a common mistake that most of us have made is being too picky. It is hard not to make this mistake, especially when you’re looking for your very first home, and you want it to be perfect. However, it may be worthwhile to make compromises because it is very difficult if not impossible, to find the perfect house in your desired area and within your budget. The trick is to purchase a property that has a similar layout to the dream home that you envisioned and spend a bit more money to make it your perfect home. Remember that you can make modifications to your house and nothing is set in stone. You can make changes such as the paint colours, the floorings and more depending on your budget.
It is easy to make at least one of these 5 mistakes when buying your first home. Now that you are aware of these easily avoidable mistakes and have a better understanding of the process, you can make your first home buying experience a successful one. Enjoy this significant chapter in your life, and we wish you all the best!
If you need further assistance or would like to discuss your personal circumstances, get in contact with FutureNow Finance today. Sarah van der Spuy is a Finance Specialist who can help you look for the best home loan solution and provide you with more information about the extra costs that are involved in purchasing your first home. Call 1300 013 730 or email firstname.lastname@example.org.