Buying a first home is a special event for any family or individual and is a very serious investment. If you choose the right property, you could end up with a great asset on your hands that will last you years and give you a solid return on investment. Make a mistake, and you could end up overspending on a piece of property that gives you headache after headache and will be almost impossible to sell. Let’s take a look at a few mistakes first-time home buyers make and how to avoid them.
Not Knowing How Much You Can Actually Afford
One of the most common mistakes people make when buying their first home is overestimating what they can afford. They tend to overlook things like maintenance costs, interest rate fluctuations, and property taxes, for instance. Do not make that mistake and try to aim low at first. Calculate how much you can expect to pay year after year with different possible interest rates if you’re going for a variable rate mortgage.
Not Shopping Around for a Mortgage
Another mistake that you shouldn’t make is getting one rate only. There are so many mortgage lenders in the country and picking the first one you come across doesn’t make sense. Shopping for a mortgage is just like anything else and the cost can vary so much from one lender to another. Not only could you get a better rate, but you could also pay less for things like closing costs, for instance, so be smart and take full advantage of the competition in the mortgage market.
And, if you’re afraid that all those checks on your credit report will affect your credit score, think again. Credit reporting agencies will allow you to make successive hard enquiries on your report within a specific time frame without them affecting your score, so check what the rules are with the three main credit reporting agencies and make your inquiries within that frame.
Not Checking Properties at the Right Time
Ideally, you want to go see a property at different times of the day and different days of the week. Seeing a house in the middle of the afternoon on a Wednesday doesn’t paint the full picture. You have no idea how safe the neighbourhood feels at night or how much activity there is. You might assume that the neighbourhood would be perfect for a family and realise that it’s getting way too busy and noisy for your taste, for instance.
Another thing we suggest you do is check the property on a rainy day. This will allow you to see whether there are any issues with the roof, for instance, or if you notice any problems with irrigation.
Not Checking the Estate Agent’s Experience
It’s easy to pick the wrong estate agent, especially considering how good they are at selling themselves and making people feel comfortable. But don’t let a nice smile fool you. You have to make sure that you pick an estate agent with lots of experience buying and selling the type of property that you want.
Check the deals they have made and the type of reputation they’ve built for themselves. Only then can you consider hiring them.
Not Considering Development Options
Another mistake a lot of first-time homebuyers make is dismissing the option of developing property on a piece of land instead of buying a home. This is a bit more complex than buying a home, but it could be a great option if you are looking for something outside the city. If the idea of this sounds daunting, we suggest you check out 24Housing.co.uk. This site is great whether you want to buy or develop your property. You’ll learn exactly what you need to know before you start building, how to identify a good piece of land to build on, and some of the things you have to watch out for.
Not Checking their Credit Reports
Another strange mistake people make when they shop for properties is not checking their credit reports beforehand.
A lot of buyers will check their credit score and won’t think to check the actual report if they feel like their score is good enough. But you never know what could be on your report and even if your credit score is pretty good, it could be even better. There could be some false entries on your report that are driving your score down. This often happens when people forget that they had an account somewhere. Providers routinely make mistakes as well.
So, order a copy of your credit report from all three major reporting agencies. Equifax, TransUnion and Experian will allow you to get a free copy, but you’ll have to pay if you want a more comprehensive service. Once you’ve received your copy, make sure to check if there are any false entries. If there are, each service has a procedure that you can follow to dispute them and, once you do everything they ask, the entry should be removed, and your credit score should be updated.
This is very important as you may get very different rates based on your credit score. So, don’t take this lightly and make it a habit to check your credit reports every year whether you’re looking for a property or not.
Skimping on the Down Payment
If you can save for a bigger down payment before buying a property, do it. And if you have the money and you don’t make the biggest down payment you can afford, you are making a huge mistake. The more money you put down, the more equity you have on the property from the get-go and the lower your mortgage payments will be, sometimes by a very impressive margin. So, look at how much you could save based on different down payment sizes.
Buying a first home can be exhilarating, but stressful as well. If you manage to avoid these mistakes, however, then there’s a strong chance that you’ll be happy with your purchase.
Lastly, one of the crucial mistakes first-time homebuyers often overlook is not considering the option of buying a home with cash. While it might seem daunting, purchasing a property outright can eliminate the complexities of mortgages and interest rates, providing a sense of security and financial freedom. By exploring this alternative, buyers can potentially save on long-term costs and secure their dream home without the burden of monthly payments.