Even if you’ve done your research (a lot of research), buying a home can be a very tricky process. From what to look for in a home itself (number of bedrooms, yard size, location, etc.) to shopping for a home loan, to hiring a real estate agent, to negotiating a final price, there is a ton of room for error. And sorry to say, but a small error anywhere in the home-buying process can result in a huge amount of wasted time and money. So here are five of the most common mistakes most homebuyers make.
1.) Relying on your agent to do everything. Your agent is there to help you as much as they can, but they aren’t you. They can’t read your mind and see exactly what it is you’re looking for. If you haven’t found a house you love, your agent needs to know what is wrong with the current houses you’ve looked at in order to give you a better selection. Nixing all of their options just because they don’t “feel right” isn’t going to help. Your real estate agent can definitely be a life-saver, but you’ve got to help them help you.
2.) Taking money out of your retirement fund to buy a home. Generally speaking, if you need to pay for a home in a way other than by home loan or money you’ve already saved up, you could be setting yourself up for trouble. If you need to take out money to pay for the home, you’re making the common mistake of attempting to live above your means. Find a different (read: less expensive) home or spend some more time saving up.
3.) Spending all your savings on the down payment. Just because you’ve saved up $15,000 doesn’t mean you have $15,000 to spend on your first home. It means you might have $7,000 to put down as a down payment, $3,000 to spend on closing costs, $3,000 for home repairs and the other $2,000 to keep in savings for emergencies. Understand that even though the home is yours, it’s also 100% your responsibility, so you sure as heck better count on having a decent rainy day fund.
4.) Assuming you’ll understand everything in that contract. There are many times when you are going to be handed a contract to read through and you’ll be fully capable of understanding it. Unfortunately, all of that experience reading simple and often insignificant contracts can give you a false sense of security. Mortgage agreements are no such contract. They are often incredibly complex with loopholes and jargon no common person will understand. It’s best to hire a real estate attorney to sit down with you and go through everything so you know exactly what you’re getting into.
5.) Buying for short-term. Your home is a very significant investment, and one that is going to be with you for the next few years at least. Buying a one bedroom home might seem like a great idea now, when you only need a single bedroom, but what are you going to do if you begin to outgrow your house? If you decide to start a family, get a dog or begin working from home? It’s important to buy a house that can grow with you as time goes by.