The prospect of buying your first home comes with a lot of feelings: trepidation, excitement, happiness, and just about every other expression on the emotional spectrum. At the very least, it can be an overwhelming experience for anyone, particularly for first home buyers who are afraid to make a lot of home buying mistakes.
However, what most newbies in the housing market don’t always realise is that even the most seasoned homebuyers can make home buying mistakes too.
Purchasing a property comes with risks and responsibilities. While this list can’t cover all home buying mistakes you’ll potentially make, it can give you a solid foundation to help you make smarter, strategic decisions when buying your first home.
Mistake #1: Not knowing how much you can actually afford.
Without knowing how much you can actually afford, you’ll end up wasting time. You may end up looking at a house that you can’t afford yet, or visit homes that are below your ideal price level. For many first home buyers, the goal is to purchase a home and get a loan with a comfortable monthly payment.
How to avoid this mistake: Know your total income, assets, and debt and find out how much in mortgage repayments you can afford. An easy way to do this is by using loan calculators.
Mistake #2: Overlooking first-time home buyer loan grants and programs.
Many people tend to overlook first-time home buyer loan grants and programs because they don’t think that they qualify. Some people don’t even know that such programs exist. These grants and programs are provided to make homeownership more affordable and achievable for many people. By overlooking these grants and programs, you could be missing out on the assistance that you need.
How to avoid this mistake: Many cities and states provide first-time homebuyer grants and programs specifically for residents of the area. Do your research. Learn more about these from your local government.
Mistake #3: Making a small down payment.
Today, you don’t have to make a 20% down payment to buy a home. Some loan programs allow you to buy a home with zero down or 3% down payment. Sometimes, that’s a good idea. However, some homeowners have had regrets about making small down payments.
How to avoid this mistake: Give yourself the time you need to save up for a down payment before purchasing a home. Aim to have at least 20% of your ideal purchase price.
The Bottom Line
These are just three of the most common home buying mistakes that most first-time buyers make.
While home buying mistakes won’t necessarily keep you from buying your dream home, they could delay the process and may even cost you hundreds – if not thousands – of dollars at the end of the day.
If you’re looking for professional advice, or if you’re looking for someone who can help you in the home buying process, don’t hesitate to give me a call!
Will Bell Mortgage Broker is a mortgage and finance broker based in Melbourne specializing in residential home loans. Will is all about the average Australian understanding just enough of the broader economy to take action on your own personal economy. He is the host of the My Personal Economy Podcast which you can check out here.
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