Your house is more than just your home. It is the place where you will make memories, potentially start a family, and it is the most expensive purchase you will probably ever make. For this reason, your home is also a financial investment, and it should be treated as such. When you make the decision to purchase your first house the excitement of becoming a homeowner, starting a family, decorating, and having your very own space might overshadow some of the finer details, which could cause you to make some serious mistakes that many first-time home buyers make.
Current Financial Mistakes
Many first-time homebuyers jump into the process of buying their first home without actually considering their finances. Many people think they know exactly what they can afford, but they might be mistaken. If you pay $1,000 per month rent, you might think you can afford a $1,000 per month mortgage. What you might not consider is the fact that at your rental, your landlord is responsible for the cost of repairing the plumbing and other issues, and part of your rent payment covers maintenance. Your mortgage will not cover your maintenance, which means you might not be able to afford to spend $1,000 per month on a home and still save enough to cover emergency repairs.
Another mistake many first-time homebuyers make is not checking their credit score before applying for a loan. Your mortgage interest rate hinges on your credit score, which means you need to make sure your score is accurate. Even if you think your score is perfect there might be a mistake on it. If there is, you need to have it rectified immediately to help ensure your interest rate is as low as possible.
A very crucial mistake many first-time homebuyers make is not getting preapproved for a loan to buy a house. There are several reasons this is important. The first reason is that you might not qualify for the amount you want. If you start looking at houses and assuming you can afford one amount, you may fall in love with a home you cannot afford because when you finally do apply for a loan you don’t get what you thought you would. Sellers prefer buyers who have been pre-approved. If you fall in love with a house and put a bid on it, sellers might accept another bid because those buyers are already prequalified, which means they can get right to the sale.
Future Financial Mistakes
When you buy a home, you absolutely must consider the resale value. Of course, it’s difficult to imagine selling a home you haven’t even put an offer in on yet, but you need to. At some point, you want to sell that house. You may not mind that the house you want doesn’t have a big backyard or more than one bathroom, but if you want people to buy it later, you have to consider those things. You may not mind living close to the airport, but potential future buyers might not be thrilled with a house that has airport noise during the kids’ nap times.
You must always get things in writing. If you bid on a house and the seller accepts it, you might put in your notice to move out of your current home in the next 30 days. However, the next day when you go to sign the paperwork saying your bid is the winning bid you might find out that the seller actually decided to change his or her mind. Get everything in writing before you make any major changes to your own life.