Are You Looking To Purchase Your First Home Start Here
Are You Looking To Purchase Your First Home Start Here
Top 10 1st Time Home Buyer Mistakes
This week I polled myFacebookfriends with the questions:
Do you remember the first home you bought? What would you have done differently?
I got a nice array of responses were received. For me personally the only thing that I would have maybe done a little differently was to buy a home with a garage vs. a carport (it gets pretty hot in Phoenix during the summer, in case you didn’t know!), but really I was very satisfied with our decision to buy – the location was good for a starter home, and the floor plan was extremely functional.
It can be difficult to tell if you are making a good buying decision in the midst of actually making it. Seems that in hindsight people feel much more strongly about their previous decisions made and it becomes crystal-clear what was a smart move and what was a bad one.
A wise person learns from mistakes made by others, and then seeks to avoid them. So, I thought it fitting to share their responses, and if you’re looking at your first home, some advice that may help you sidestep a decision you’ll regret down the road:
1. Home that backs a commercial area
The builder sold this client on the benefits of backing a commercial area, primarily that he wouldn't have any neighbors behind. In reality, he DID have a neighbor,but it was a public one where anyone could drive around in his yard!
The reality is that most buyers will avoid a home that backs up to a commercial location, primarily for safety & desirability reasons. Most people don’t want to look out their back window & see a large building behind. So it makes the resale tricky, and will generally sell for lower than other homes in the neighborhood that don’t back commercial space.
2.Bought at the top of the market
I probably should have listed this as #1, but this can really be tricky to know in the heat of the moment. Looking back you can seeprice trends in Phoenix, but when the market is down is generally when people are sheepish about buying a home. When it’s up and everything’s honky dory, we get swept up with emotion and excitement for all the great things happening around us. It’s tough to think analytically and objectively when we tend to look at what everyone else is doing.
3.Buying a home that backs a busy street
Ok, so it’s similar to #1, but for a slightly different reason. You are probably going to have a tougher time selling a home that backs a busy street than you will a commercial space. With a busy street, you have constant car noise that may have a tendency to enter your home. A home that backs a busy street is going to sell for 5-10% below other homes in the neighborhood. If it doesn't affect the inside, it may still make it tough to relax outside.
4.Jumping on the first home you see
Some wish they would have looked at a few more options and not settled for one of the first homes that they see. Having a short term vs. long term financial goal in mind as well, instead of being an impulsive uneducated buyer can serve the interests of thefirst-time buyer.You don’t want to feel rushed to get a home, unless you truly are in a hurried situation. Make sure it’s going to fit your lifestyle and plan on being there longer than you expect.
5.Not considering additional expenses
Guess what? When you buy a home, it’s not just your mortgage payment you have to worry about! You are now responsible for any repairs that come up and can no longer rely on putting that late-night phone call in to the landlord for the clogged toilet. If you have a pool you will need to learn about basic pool care. Lawn maintenance is other item people tend to overlook – as with anything having to do with the home, you can either 1) do it yourself, or 2) hire someone to do it, in which case it becomes an expense.
Of course you did ahome inspectionbefore you bought the home (didn't you?), so you would know if any major repairs are coming down the road, such as air conditioning unit, roof, or plumbing. You are going to foot the bill for these, so make sure you come in prepared. Oh, and if you are in a Homeowner’s Association (HOA), don’t forget about those fees too.
6.Purchased before being better prepared financially
Your debt-to-income ratio is one of the first things lenders look at whenqualifying you for a mortgage. Being overladen with student loan, car loan, and credit card debt may not prevent you from qualifying, but it may mean little money left over at the end of the month after all your bills are paid. Most buyers don’t even think about the concept of having an emergency fund. And if all of your money is going for down payment & closing costs, you are putting yourself in a potentially-compromising situation with your finances.
7.Skipping the home inspection
So you are making the single biggest purchase decision of your life and aren't willing to fork over $350-500 to have itprofessionally inspected? Home inspectors have been highly trained to spot potential issues in a home that affect it now or may in the future. You can avoid potentially disastrous situations by knowing about them in advance. Then, you can ask the seller to address them before you close on the home. It’s a form of insurance you want on your side.
8.Being too picky
Do you have a 20-point checklist of everything your first home MUST have? Most likely you are going to be disappointed. Make a list of “must haves” and “preferences”. Must haves are the items that are non-negotiable, and preferences means the home may or may not have it. The less hard & fast requirements you have for your first home, the happier you’ll probably be, particularly if what you are requiring doesn’t exist in the price range you are looking.
9.Letting your emotions get the better of you
Overly excited about one particular house? This could come back to haunt you, whether it’s the seller getting wind and trying to negotiate a less-desirable price for you, getting beat out by another buyer who offered stronger terms, or some other reason. Do your homework to make sure you’re making a very sound decision – hash out positives and negatives of the home. If it’s in your ideal neighborhood and a massive fixer-upper, don’t overestimate the amount of work you’re going to be willing to do and get in over your head. Be realistic or it could prove to be a decision you aren't happy about.
10.Counting your chickens before they hatch
When you purchase your first home, base your house payment on what your income is now, not what you expect it to be down the road. Is your wife up for a promotion? Don’t count the income from the job she’s going to get. Finishing up medical school? Going in with the mindset of what you WILL be earning can be a mistake. Better to be conservative than overextend yourself and get into a bind.
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