Buying a home is often one of the most significant financial decisions a person will ever make. It can feel like a formidable responsibility with so many things to consider, such as house size, neighborhood location, and what the house needs before moving in. The financial concerns that come with the home-buying process can also make this procedure stressful for the buyer.
Outspending your Budget
When starting the home-buying process, you have to know how much you can realistically afford. It is wise to allocate 30% of your overall budget to home-related expenses including taxes, maintenance, utilities and insurance. This percentage should also cover the down payment, one-time and recurring costs related to owning a home, and closing costs. This budget will allow you to understand what you can legitimately afford and prevent you from running out of money in the future.
Overlooking Mortgage Options
If you intend to take out a loan, a loan officer will be able to tell you which loan you qualify for, how much interest you will be paying and the estimated monthly mortgage payments. Many home buyers accept the first loan offer they get without comparing different lenders first. This is important to make sure you are getting the best interest rate or even an opportunity to pay off the loan early. When considering a VA or FHA loan, ensure that you compare it to a traditional loan because while they require a lower down payment, they could cost more in the long run because of mortgage insurance and interest rates.
Working with the wrong agent
It is imperative to work with an experienced agent who keeps your best interests in mind and has worked with many buyers. Your agent should find a house that fits your criteria both financially and physically. If your agent is constantly pushing you to go over budget or use your entire budget, it could be wise to consider working with a new agent.
Choosing Wants Over Needs
It is common for buyers to get caught up in the home-buying process and start spending money on unnecessary amenities. It is good to keep a list throughout the process, one section with the items you must have and one with things you would like to have in your future home. This will keep your goals and budget restrictions clear throughout looking at different homes.
Skipping the Due Diligence
It is always crucial to get things in writing throughout the course of home-buying because purchasing a home is a legally binding contract that should be as detailed as possible before signing. For example, when you see a house that has things you like, you can’t rely on the buyer to leave them based on a verbal agreement, hence, it is always best to get everything in writing.
Forgoing the Home Inspection
While deferring the home inspection can be enticing, inspections are vital to uncovering any problems that could not be seen otherwise, such as electrical problems or even termites. These inspections usually cost between $300 and $500 but spending that money could save you from even higher costs in the future.
Looking to Buy a Home?
Before starting your home-buying journey, create a budget and make sure that you do not buy more house than you can afford. You should also keep in mind that buying a home can impact your ability to save for other things such as emergencies or retirement. If you’d like to get personal advice on getting the highest value for your home, the real estate agents from Velocity Realty can help! Give us a call at (403) 603-6800, or click here to get in contact with us!
Joey Bergandi of Velocity Realty has been helping San Diego Buyers and Sellers successfully for the last five years. Joey’s ideology of Real Estate stems from transparency and communication. He believes that all transactions begin and end with direct conversations and honest expectations. If you are looking to start the process today, call Joey at (408) 603-6800!