Being a first-time home buyer in the Austin real estate market can be exciting, but also a little confusing as it offers an array of neighborhood and housing choices from Bee Cave to Spicewood, there are so many beautiful homes to fit a range of needs and budgets, just selecting the home can be quite consuming. To help you prioritize and not get swept up in the process, this article will talk about common mistakes made by first-time homebuyers and how to avoid them. Being an informed consumer will serve you in many ways to include choosing your community, what type of home you will be buying and most importantly, avoiding a costly financial mistake.
There are many common errors made by first-time home buyers, from not looking to the future to skipping loan pre-approval. Understanding the home buying process will help you be prepared with knowledge to prevent any delays or cancellations in negotiating your contract. Here are a few things to avoid when buying your first home.
Lack of Financial Planning
One of the most important mistakes to avoid is assuming you can afford more than the bank says you can. You will want to make a budget and list your monthly expenses. This budget will include credit card payments, groceries health, student loans, car payments, savings, all other regular payments and expenses. Once you have the total on your monthly bills, subtract that amount from your take-home pay and this will tell you how much you can spend on your new home every month. Use a mortgage calculator to research current interest rates and this will give you a more accurate estimate of what your total mortgage payments will be.
Not Getting Pre-Approved for a Loan
Skipping mortgage qualification can cause you to waste time and possibly money when you sign a contract and then find out that the bank will not lend you the amount that you need. It is possible the bank may provide a will a loan but with unacceptable terms. Pre-approval often helps avoid this situation. However, even if you are pre-approved for a mortgage, the loan agreement can fall through if you do something that changes your credit score such as financing a vehicle. Events such as this may cause you to forfeit a deposit or earnest money.
Not Budgeting for After the Purchase
Not considering the additional expenses of home ownership is another budgeting mistake made by first-time home buyers. Keeping in mind that there will be property taxes, homeowner’s insurance and repairs should be part of the budget planning when buying a new home. If you were buying a condo or duplex, investigate if there are monthly maintenance costs or homeowners association fees associated with living there.
Having unrealistic expectations and lack of vision can also hinder finding a home for the first-time home buyer. You will obviously want to have a list of the things you desire for your new home, but do not fall into the trap of being inflexible. You should recognize things like replacing ugly wallpaper, painting over trim that is an undesirable color or adding a room in the future are things that will add value to your home later and save you money now. Being able to compromise on simple things will help you stay within your home buying budget.
Not Getting a Home Inspection
Skipping over the home inspection is not a good idea, especially for the first-time home buyer. You will want to know that there are no major repairs needed to be done in the immediate future. There is already plenty of expense involved with buying and moving into a new home. No matter how much you love the home, or how excited you are to be moving to a new neighborhood, do not let your emotions cloud your good judgement.
Not Looking to the Future
Not considering the future development of the neighborhood is something many first-time home buyers do not do. It is impossible to predict the future of a chosen neighborhood completely but looking at available information can help you determine whether or not you will want to live in a location over the long haul protects your sanity and investment. If you are buying in a newer development, you will want to know what development plans are in the future. Will your presently quiet neighborhood street become a major road or a rush hour shortcut? Will they be expanding a highway right behind your house? You will also want to know what the zoning laws are in your area and if there is undeveloped land surrounding your neighborhood what will likely be built there. Finding answers regarding these questions can help you avoid unpleasant surprises.
Protecting yourself from the common pitfalls of home buying will allow you to take this life milestone with confidence and make it a smooth transaction and eventually a happy memory. Buying a home is a major event but it should not be a difficult one.