Did you know that 64% of millennials have at least one regret about buying their home?
Buying a property is probably the biggest financial commitment you’ll ever make, yet many people still don’t do enough research and end up making common property buying mistakes. This could be buying your first home, buying an investment property, or buying your retirement nest egg.
The thing to remember is that this is probably the most important investment you will make in your lifetime. You can damage your future if you are unprepared when buying a property.
If you are wondering about common property buying mistakes and how to avoid them, this short and simple guide is for you.
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Not Knowing Your Goals
Before looking at properties for sale, it’s important to know exactly what you want out of your home ownership experience.
Do you want to live in it? Rent it out? Flip it?
Each of these options has different requirements and costs associated with them. Make sure you understand what kind of time investment buying a property will require so that you can set realistic expectations for yourself.
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Failing to Get Professional Advice
Buying property is a big financial decision, so you need someone who knows what they’re doing on your side.
A good real estate agent or Realtor will have extensive knowledge of the local market and can provide recommendations based on their experience. This is whether it’s an updated list of suburbs with good value or a list of local agents with whom they’ve had positive experiences working in the past.
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Not Getting Financial Pre-Approval
A pre-approval is an official letter of approval from a lender that confirms the amount they will lend you.
It’s very important to have this in place before you look at properties because it means you can be more confident that you have the funds available if you find something that suits your needs. The lender will also be able to review any documents related to your finances, which can help them determine whether they’ll approve your loan application.
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Choosing the Wrong Location
Most times, people will buy a house or apartment because they like the area where it’s located, not because they like the actual property itself. This is a mistake because it can lead to future problems down the road.
If there are issues with neighbors or other factors affecting your quality of life, then it may be difficult to sell in the future at a decent price. When looking for new homes, make sure that any location you’re considering offers everything that matters most to you and your family. This includes excellent schools, easy access to public transportation, and amenities like parks and shops.
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Settling for the First Home You See
Many home buyers make the mistake of settling for the first property they see, even if it’s not what they’re looking for. The problem with this is that you may end up spending more money than necessary on a property that doesn’t meet all of your needs or that doesn’t live up to its potential in other ways (it could be too small or too big).
Instead, have a property shopping strategy and take your time and look at as many homes as possible before deciding on one that meets all of your criteria. This will allow you to make sure that everything about the house is perfect for you and your family before making any final decisions.
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Choosing the Wrong Type of Financing
Mortgages come in two main types: fixed-rate loans and adjustable-rate mortgages (ARMs). Fixed-rate loans stay at the same rate for the life of the loan, while ARMs have rates that change based on market conditions and other factors.
While ARMs can offer lower payments when interest rates are low, they also come with higher monthly payments whenever the market decides. Fixed-rate loans allow you to make lower monthly payments when interest rates are low but also help you make larger overall payments when interest rates rise again later on down the line.
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Forgetting About Maintenance Costs
Owning a home means being responsible for maintaining it. This includes routine maintenance, such as fixing broken windows or leaky pipes. You also need to consider bigger-ticket repairs such as replacing old appliances or upgrading your heating system if needed.
A home inspection will reveal any problems with the property but won’t consider any future expenses that might come up down the road. Make sure you have at least six months’ worth of mortgage payments saved up as an emergency fund so you can cover these costs when they arise.
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Budgeting Too Little Money
Many first-time homebuyers think they can afford a home by spending less than they earn.
However, this approach often fails because mortgage lenders need to see proof that you have enough money set aside for mortgage payments, taxes, and insurance. If you don’t have enough money saved up, you may be forced to make late payments or skip your mortgage payments altogether. Both of which could lead to foreclosure down the road.
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Forgetting About Closing Costs
Closing costs are those expenses associated with closing on your loan that is not included in your monthly payment. They can include such things as legal fees, inspection fees, and more.
It’s important to budget for closing costs so that you don’t end up short at settlement. Closing costs can vary widely depending on location and property type, but they can run from 1 percent to 5 percent of the total sale price, or even more if there’s an appraisal.
Avoid These Common Property Buying Mistakes
As the economy continues to improve and property values continue to rise, there has never been a better time to buy a home.
Buying a home can be a difficult one, and it’s easy to make common property buying mistakes. However, if you’re proactive and educate yourself on what to look out for, you will reduce your chances of making a mistake.
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