Are you looking to buy your first home?
It isn’t easy to find an affordable home for first-home buyers.
Whether it’s an old apartment or a new one or a house in the outer suburbs, many first-home buyers tend to make a few common mistakes when they are caught up in the excitement of buying their first home.
Here is a list of some of the most common mistakes made by first-time homebuyers you should avoid when buying your first home.
Ready to learn more about getting started in property investment? Check out the beginner’s guide here.
Mistake #1 – House Hunting without pre-approval
It’s not enough to just qualify for a home loan.
It is important to visit the lenders and ask them about the maximum amount they can lend before you go out and start looking at properties.
Knowing your upper limit will help you focus only on houses you can afford and allow you to avoid the disappointment of finding that perfect home and learning that you can’t afford it.
Mistake #2 – Not Understanding Mortgage Options
It’s true that getting a home loan is easier today as compared to earlier times as most people had to save for many years in order to have enough for the down payment.
While it is easier today, you also need to keep in mind that it might be more expensive and also riskier.
When you take a no deposit home loan, you also have to pay for mortgage insurance. You need to check with different lenders and discuss in detail all the options available to you before coming to a decision.
In some cases, it might be better to make a deposit while saving on the ongoing cost of mortgage insurance.
According to Sydney PPC marketer and homeowner Michael May, it pays to do your homework. He explains “with so much information available online it’s tempting to close your eyes and pick the simplest option. But what looks good upfront can actually end up being worse for you in the long run. I recommend chatting with a professional team like Aussem who can layout your options in a simple and clear manner. You’ll be thankful you did when it’s all said and done.”
Mistake #3 – Borrowing Too Much Money
One of the most common mistakes made by first-time buyers is that they end up borrowing too much money.
If you borrow to your financial limit, it might stretch your finances and you might not be able to make any improvements to the property. In fact, you might end up not enjoying the life in your first home due to financial issues.
Also, you might have to sell your house before building any substantial equity in case you have to face any unforeseen financial problems.
Mistake #4 – Relying on Others
Many first home buyers make the mistake of relying extensively on the local real estate agencies. Instead, it’s recommended to do independent research and have a pre-proactive approach when it comes to house hunting. It’s easy to find auction results online and in the local paper.
Take a note of the auction results and narrow your search to the suburbs and streets where you would want to buy a house and in this manner, it will be easy for you to find the selling price of properties in that area.
It will allow you to make a realistic counteroffer to the vendor’s agent (always working on behalf of their clients) when they quote a price. In case you decide to buy your first home at auction, you will save quite a bit of money.
Mistake #5 – Buying a Property without Pre-purchase Inspection
When it comes to the best real estate deals, you’ll find that these happen to be older homes that need minor renovations and cosmetic repairs.
On the other hand, the worst real estate deals also tend to be older homes that require expensive major repairs. These expensive repair jobs are typically not visible on the surface.
According to plumbing experts, “avoiding a pre-purchase inspection report will save you some money but don’t forget that getting an inspection report from one of the many independent building inspectors also has the potential to save a lot of money once you move into the home. It is also recommended to get a pest inspection done to be on the safe side.”
Mistake #6 – Not Accounting for Other Costs
Don’t forget that you will have to pay for other things in addition to the cost of the house.
This is a commonly overlooked aspect of first home ownership according to the roofing team at CM Roofing Services. They explain “some of these additional costs include the cost of moving, stamp duty, transfer fees, council rates, inspection reports as well as home insurance and – what we see often – home upgrades. It might turn out to be a fatal mistake when you simply don’t take into account or underestimate these costs.”
It’s important to be sure about the costs of moving into a new home in order to prepare a budget. You will sleep well when you don’t have any unexpected financial issues on moving into your first home.
Mistake #7 – Making an Emotional Decision
For most first-home buyers, it’s an emotional experience and sometimes, people let emotions get the better of them.
You should think like a professional home renovators who only take into account their ROI when it comes to buying a house. When a professional renovator doesn’t find an offer attractive due to low ROI, they simply walk away and this is what you should do.
Feeling ready to avoid these common mistakes? Check out the 6 BIGGEST mortgage mistakes to avoid and stay on top of your finances.
If you avoid the above-mentioned common mistakes, it might take some time to find your first-home but the effort will be worth it.
It will allow you to build your future on a foundation that is as firm as the foundation of a well-built home.
While finding your first home can be a challenge, by avoiding these 7 common mistakes, you’ll streamline the process and wake up in your dream home before you know it.
Looking for help on your journey to home ownership?
Fiona White is an Australian freelance writer and Sydney-based university student. As an Accounting student, she has a passion for learning about global changes in business culture and specialises in entrepreneurship and innovation-related topics. When Fiona isn’t at her desk, you’ll find her exploring National Parks.