So, you’ve graduated college, scored your dream job (or are working your way toward it), and now you’re ready to buy your first home. While this is an exciting step in your journey into adulthood, there are also a lot of missteps that you can take that can lead to long-term consequences. In order to make your home-buying experience as easy as possible and help you achieve the best possible outcome, make sure you’re aware of these 3 mistakes to avoid when shopping for your first home.
Buying Outside Your Means
Seeing all the beautiful homes as you search through properties can open your eyes to a whole new world of luxury living. However, it’s important not to get distracted by homes outside your means. Otherwise, you may find yourself in a difficult financial position a few months up the road.
Say you have found a nice starter home in one of the hottest places to move in the U.S. right now, Austin Texas. However, you’re persuaded to go bigger and in a pricier part of the city because you and your partner decide to take a leap of faith. If you’re not able to quickly move up the pay scale, buying a house outside your means can have long-term financial consequences. Pushing your fiscal boundaries can lead to you having to run up your credit to make ends meet or even potentially defaulting on your home loan. Down the line you may even have to apply for a Texas reverse mortgage to free up some cash flow since you weren’t able to save sufficiently for retirement.
Before you even start shopping for a home, you should set tight budget parameters that you intend to stick to. That doesn’t mean you will have to settle though; you’ll just need to be more flexible to find the home of your dreams without breaking the bank.
Rushing into a Decision
Purchasing a home will be one of the biggest financial investments of your lifetime (along with paying off your student loans). As such, it’s important not to rush into this decision lightly. If you have California listings being sent to your email or are closely watching the real estate market, it may be tempting to jump on a good opportunity on the West Coast. However, a house is not only a large financial investment, but a lot of responsibility. From paying HOA fees and maintaining the yard to moving logistics, there are a lot of hidden costs and duties that come with homeownership that you should educate yourself on first.
Just like you took your time choosing a college to find the perfect fit, you want to do that with your first home. After all, you’re probably going to be here for a lot longer than four (or five) years. Did you know that most mortgage terms are 15 or 30 years? While you don’t necessarily have to own your home that entire time, you can sell it, it is something you should consider a long-term commitment. Planning makes perfect, so be sure to consider where you want to live, how much room you need, what style home you want to live in, which amenities are must-haves, and other factors that matter to you before making any buying decisions.
Failing to Request Proper Documentation & Inspections
As a first-time buyer it’s understandable that you wouldn’t know the ins and outs of the home-buying process. However, there are a few essentials that will save you a lot of headache down the road—a contract that covers your bases and a thorough inspection. Before you finalize your purchase, you should always make sure these two things are checked off your list. A property inspection should be conducted by a third-party contractor who can check the home for any defects and provide you with an itemized list of any issues that may jeopardize the structural integrity or safety of the home. Typically, you want to have any issues repaired by the owner because they can be costly. Otherwise, you will want to negotiate the price of the home if the work is going to be costly.
When it comes to the contract of sale, you want to ensure that all the necessary conditions are covered including the agreed-upon closing date, any fixtures or appliances that should be included, who’s paying for which closing costs, and other important terms.
Typically, a good real estate agent will guide you through this process, but it’s important to ensure that these are taken care of for your peace of mind.
Make Your First Home-Buying Experience a Success
Don’t let these warnings dissuade you from your goal of home ownership, but instead guide you into making the best decisions throughout the process. With the right research, planning, and attitude, you can find the perfect first home to compliment your post-college lifestyle.