Buying a home can be incredibly daunting, especially if it IS your first rodeo.
A home is the biggest purchase most of us will ever make in our lives so it’s important to get it right. But a lot of people make mistakes when buying their first home because the process can be riddled with complexities.
Here are some of the most common mistakes first home buyers make so you can avoid making them too.
1. Going beyond your budget
It’s human nature to want the very best, and when we see a more expensive property that looks so much better than the homes we can actually afford, of course we want the more beautiful home.
With the property market currently going gangbusters, many buyers are paying through the nose to secure a property as house prices soar.
But it’s really important not to over leverage yourself because the bank has given you a borrowing limit based on your ability to repay the loan. By going over that limit, you risk exposing yourself to future financial risk if your circumstances change or if interest rates rise (and they will, it’s just a matter of time).
2. Not doing enough research
You may have a shortlist of potential suburbs you’d like to live in, but how much research have you actually done on them? It’s not enough to pick a suburb based on its proximity to your office. That might be okay if you’re looking for a rental but when you’re buying, you need to go further and research suburb crime rates, transport, amenities, schools, potential zoning issues, if there is any upcoming infrastructure planned (such as an apartment building scheduled for construction that would block out your city views) and so forth.
Remember, you’re not just buying a property, you are also buying the location.
3. Underestimating the true costs of buying a home
The down payment is only one piece of the puzzle when buying a property. There’s also conveyancing fees, building and pest inspections, lenders mortgage insurance (LMI), stamp duty, rates, etc.
You also shouldn’t underestimate the costs of owning a property, like council rates, insurance, maintenance, etc.
4. Skipping building and pest inspections
Speaking of underestimating the true costs of buying a home, some first home buyers decide to forego building and pest inspections altogether. According to recent reports, some first home buyers are even ignoring unfavorable building and pest inspection reports in a bid to beat competition to get into the rising market, while others aren’t even ordering them.
Unfortunately, this means running the risk of being lumped with a ‘lemon’ and needing to resell quickly.
5. Not getting pre-approval
In the eagerness and excitement of looking for your first home, some first time buyers don’t bother getting pre-approval before making an offer on a property. Unfortunately this usually ends up in loan rejection down the track because the property you’ve made an offer on is outside your borrowing capacity.
Buying your first home? Get pre-approval now!