#The Most Common Mistakes First-Time Homebuyers Make and How to Avoid Them

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The Most Common Mistakes First-Time Homebuyers Make and How to Avoid Them

Buying a home is a big step and a substantial investment for many people. It is a complex and, at times, overwhelming process. For many people, buying a home happens only once in their lifetime, and they want to do it right. That’s why prospective home buyers read online about choosing the perfect property to buy, some essential factors to consider, and the best time to purchase a property. However, a few of them focus on learning more about the most common mistakes first-time homebuyers make and how to avoid them. Before starting the home search process, keep reading to learn more about this topic.

One of the most common mistakes first-time homebuyers make is spending more money than they can afford – you need to be really careful about your finances. Another crucial mistake that many of them need to correct is assuming that they know the local market, which is often different. This can be a costly mistake. Moreover, another common mistake is not preparing for the mortgage process and overlooking certain extra costs. Lastly, some first-time home-buyers also tend to skip the home inspection, which is not recommended.

1. Spending more money than you can afford

Before starting the whole home-buying process, you should stop for a moment and consider your budget carefully. To avoid feeling frustrated and helpless, you should calculate how much you can afford to pay monthly and start looking for houses that fit that price range. You should be focused but also flexible. Having a strict idea of a perfect home in your mind and discharging anything that isn’t that can be overwhelming. You should set a list of priorities, necessities and wants. When you find a suitable home, at least in some aspects, you should carefully consider whether it really works for you. An overall practice is that your monthly mortgage rate shouldn’t be more than 28% of your total income. And, if you have some other debts as well, the percentage should be even lower.

2. Assuming that you know the local market

Another common mistake many first-time home-buyers make is assuming they know the local market. Hiring a local real estate agent can greatly help your home search process. That refers to either buying a property in your country or abroad. A professional and qualified local real estate agent with experience can provide you with a local comparative market analysis. That insight is helpful for you as you can learn more about the prices of the local properties that were sold recently. Knowing that helps you create a fair market value. This is different from a home appraisal. It merely estimates how much the home might sell for and how quickly, considering current trends.

For instance, if you are interested in buying a property in Sydney and you are from a different Australian city, it would be better if you hired a local buyer’s agent from Sydney to help you find a perfect property.

3. Not preparing for the mortgage process

Moreover, the mortgage process is a serious and complex one – and as such, it requires careful preparation and planning. Before even knowing if you qualify for a mortgage and how much your rate would be, your lender needs to evaluate your credit report and calculate your debt-to-income ratio. By doing that, they can learn more about how much money they owe and how much money they have coming in every month.

4. Overlooking the extra costs

Besides the home’s purchasing price, there are also other additional costs. They include closing costs as well as some extra costs of home ownership. These costs are often an unpleasant surprise for most first-time home-buyers. When you get the keys to your new home, you will also have to deal with extra costs such as property taxes, homeowners insurance and regular maintenance. You also might need to pay certain fees to a homeowners’ association or a co-op board, depending on the area where your property is located.

5. Skipping home inspection

A home inspection is a vital step of every home-buying process, and you shouldn’t skip it. It is a process that thoroughly evaluates the state of a property, and it can identify major structural issues, costly repairs, and the condition of appliances. The aim of a home inspection is to make sure it is livable.

Buying a home, especially for the first time, can be stressful and overwhelming, having too many aspects to consider. Hopefully, this guide can help you avoid making costly rookie mistakes.

by Jess Cooper

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