Buying your first home is a life-changing moment. While it’s exciting, it can be overwhelming and a little scary too. We’ve put together a list of the most common mistakes made by first home buyers to save you from the pain of a real estate pitfall.
Not doing your research
Buying your first home is not something you want to go into blindly. If you forego research, the results could cost you thousands of dollars and potentially stall your home ownership dream. Before you start browsing for your new home you need to ask yourself a few questions:
- Where do I want to live?
- What kind of property am I looking for (house, apartment, townhouse)?
- What is the neighbourhood like?
- Which schools are nearby?
- Will there be any major developments nearby in the next few years? (You can find this out by talking to the local council.)
Not being realistic about your finances and what you can afford
Overcommitting yourself financially isn’t just a trap for first home buyers – it can happen to anyone. It’s important to sit down and prepare a budget. Take into account your current income, expenses and savings and steer clear of ifs (if I get a pay rise, if we sell the car). It’s also important to factor in other expenses that come with home ownership, like rates and maintenance.
Not organising finance pre-approval
If you find a home you love, you’ll want to snap it up before someone else does. That’s why having finance pre-approved is crucial. To be pre-approved for a home loan, you need to supply the bank or mortgage broker with details about your current financial situation. You will be asked to supply proof of income and details about your assets and liabilities. Most lenders also ask for evidence of your deposit (in most cases you need a deposit of 5 to 20 per cent of the loan amount). The lender will do a credit check, assess your details and give you a response usually within 5 – 7 days.
Finance pre-approval is handy for two reasons:
- It gives you a clear indication of how much you can spend
- Most of the financial paperwork is complete, so you’re free to make an offer immediately.
Not planning on hidden costs
Buying a property is never as simple as paying the listing price – there are other costs that you’ll need to factor in too. They can include:
- stamp duty
- building and pest inspections
- transfer fees
- application fees
- solicitors’ fees.
Hidden costs will vary based on a number of factors including the price of the property and the loan product you choose, but a buffer of $10,000 is a good figure to aim for.
Not getting a building inspection
Purchasing a property without having a building inspection done is not advisable. You may want to try to speed up the process (especially if you’re feeling pressure from your agent) but skipping an inspection could lead to costly problems and potentially hazardous situations.
Not being able to separate your heart from your head
Buying your first home is one of those times when emotions can take over. You may think that you’ve found your dream home, but letting emotion guide your purchase is unwise. You need to take a step back and assess the situation with your head, not your heart.
Not using grants that are available to you
Don’t miss out on the chance to take advantage of federal funding for first home buyers. The guidelines and requirements change from state to state, but you can find all the info you need on the First Home Buyers Grant information page.
We hope these tips come in handy if you’re planning to buy your first home. Do you have any other suggestions we should add to our list? Let us know on Facebook.