While a house is a big investment and an even better place can call home, there are specific mistakes that everyone should be aware of and avoid at all costs. The following are five mistakes to avoid all home buyers when looking at buying a new home:
1. Do not buy a house if you have plans to move again
Many people fall in love with the idea of a house and a purchase even though they know that they plan to move soon.
Understandably, people feel that it is wrong to hire and continue to write checks landlords, while paying zero equity in a home that they do not own. Based on the feeling that pay equity is better than paying a landlord, many people jump into home ownership with the idea that it is a good investment regardless of the time horizon.
If a potential homebuyer is not sure whether he intends to stay in its current location for more than two years, it’s probably not a good time to make a purchase. With closing costs, property taxes and the possibility of depreciation of assets, homebuyers who move shortly after the purchase of a home would lose more money than the shares they pay down.
2. Do not blow a fixed budget
It may be due to the rise in popularity of home-purchase shows on networks like Home and Garden Television (HGTV), but many potential homebuyers on a budget and then promptly ignore when they see a house out of their price range.
However, the budget was for a reason. Back when emotions were not involved, the budget set was probably based on logic and financial constraints. It is important that a homebuyer is remove emotions from the financial equation.
While budgets may be stretched and dollars met many homebuyers not consider scenarios where income may decrease or may depreciate the property market. If this happens, the revised budget to purchase a “dream home” ends in a big mistake.
To counter this potential error, be sure to get preapproved for a loan before house hunting. In this way an upper limit is set, and only houses are viewed under this limit.
3. Do not forget about added and hidden costs
Alluded to above, buying a home is not a simple act of trading a rent payment for a mortgage. First, there are closing costs, property taxes, homeowners insurance and even homeowners association (HOA) fees. In addition, home buyers almost never think about the maintenance costs normally covered by the owner of the place where they rent after.
With all these added and hidden costs, it is quite possible that even a house within budget could be quickly passed budget. It is important to factor in these costs when looking for a home and making a purchase decision.
To do this, ask around about how much the average maintenance, other taxes and insurance costs in the location of the house. Add these costs to the monthly mortgage to get the potential real cost of homeownership.
4. Do not skimp on the deposit
While the economy continues to climb and continue to appreciate houses, do not forget about the financial crisis, housing 2008. While there are many factors of the economic downturn, a lot of that was due to give lenders of mortgages to unvetted buyers at little or no down payment.
Although not all homebuyers standard, skimping on the deposit means that the monthly mortgage payment is much higher; remember this increases the interest payments. Although it sounds better to put less down, then cover higher mortgage with a level of monthly income have a homeowner may have, do not be fooled. This is exactly the mentality had others for defaulted pre-2008.
A small deposit ensures a homebuyer does not only have a higher monthly mortgage, but also has less initial equity in the house. If something comes up and offers to sell the property, it is possible that he he has more than equity due in the home.
In addition, if a small deposit is put down, mortgage insurance must be paid up to 20% of the house is paid off, further increasing the cost. If possible, wait to be put up to 20% lower than for the purchase of a home.
5. Do not forget to take advantage of an inspection
If someone above HGTV shows, often saw the most beautiful houses become the most nightmare. This is because, although a large home there may be on the outside, there are many problems can wait below the surface.
Leaking pipes, a lack of proper insulation, an eroding foundation and even a defective chimney are just some of the many problems that can not be found by a potential homebuyer at first sight. If the house is taken at face value and the purchase of the new homeowner is responsible for all the potential problems.
It is therefore important to potential homebuyer inspecting the house by a professional inspector. These professionals know exactly what to look at a house on the market, even including hard-to-spot water damage and termite infestations.
Often, the cost of inspection even under the seller. If significant damage is found during the inspection, repair prices can be negotiated in the purchase price of the property, to protect the homebuyer to pay out-of-pocket for these costs.