5 Traps To Avoid As A First-Time Home Buyer
Buying your first home is a milestone moment in anyone’s life, signifying personal progress and a big step forward towards your future. Typically, first-time buyers are looking to buy at the lower end of the market, which also tends to be the most competitive.
Unfortunately, this can lead to rash decisions being made and mistakes that can cost you thousands (if not millions). The first rule of house hunting is to leave your emotions at the door and make rational, logical decisions that make sense in the long run. In this article, we’ll help you do exactly that by exploring 5 traps to avoid as a first-time home buyer. With these in mind, you can go into the process with a clear head and buy the house of your dreams, not your nightmares.
If you think you’ve come across the ‘perfect’ home, it can be easy to let your emotions get in the way of making the right decision for you and your finances. When buying a home, it should meet three main criteria – it’s below market value, has significant growth potential and has a positive cash flow. If your house doesn’t meet these criteria, there’s no reason for you to overspend. It’s important to remember that this ‘perfect’ won’t necessarily go up in value, and you could find yourself bleeding money for years to come.
The only way to avoid this is to buy below market value and always have a clear understanding of what you can afford and what a property is worth. To help you make an unbiased, strictly logical decision, we recommend working with buyers’ advocates who’ll help you stick within your budget and only consider homes that are truly worth considering.
- Borrowing more than you need
Something you can always count on is unforeseen expenses, whether it’s continued maintenance or costly repairs. It’s also impossible to tell what the future could hold for you both career-wise and health-wise, and unexpected costs or loss of income can be around the corner at any moment.
This is why it’s always recommended to borrow below what the maximum you can afford is, giving yourself some breathing room in case something goes wrong in the future. This means you should have enough cash flow to cover whatever life throws at you, and still have enough left over to pay your home loan.
- Not reading the sales contract properly
Legal contracts can be long and complicated, so always make sure you have a professional look over them and explain it in detail to you. Unfortunately, there are many hidden clauses in sales contracts that can trap you in less-than-desirable situations, so make sure your team is ready to go when it comes to reading and negotiating any contracts you receive.
Before signing, make sure you check everything that’s included and have it redrafted if you see anything out of place. If a real estate agent tells you that you can ask to change something after signing, don’t believe them. While it’s true that you can definitely ask, there’s no guarantee your request will be accepted.
- Skipping the building inspection
If you’ve put in an offer on a home and it’s been accepted, before signing on the dotted line it’s always recommended that you have both a pest and building inspection performed by a professional. The fee you’ll be required to pay will be minuscule compared to the cost of any unforeseen repairs that you’ll have to pay for without one, and a building inspector will know exactly what to look for to help you avoid this.
Once you receive the report back, you might be able to even use it to negotiate the price further or come to an agreement with the seller regarding any necessary repairs.
- Buying a fixer-upper
Many first-time buyers make the mistake of buying a fixer-upper and investing too much money in it, failing to do the proper research and finding themselves too far into the process before they realise what they’ve done.
The problem with expensive renovations is that they don’t always guarantee a return on your money, especially if you live in an area that lacks amenities or doesn’t have high demand in the property market. If you’re looking to design a home that’s customised to your needs and lifestyle, then chances are it’ll be cheaper to start from the ground up rather than renovate.