In theory, buying a home should be fun and exciting. But for many people, in reality it’s stressful, tedious, and worst of all: excessively costly. We’re not talking a few hundred bucks here. We’re talking tens and even hundreds of thousands of dollars — and probably a lifetime of financial regret.
If you’re hunting for a new home, then here are 7 costly mistakes to avoid:
- Buying “too much house.”
It’s perfectly fine— and in fact, very smart — to think ahead. For example, if you’re planning on adding a little one (or several little ones) to your family in the next few years, then looking at larger homes makes sense. But if you fundamentally cannot afford a home, then cross it off your list. Don’t count on your home considerably appreciating in value in the years ahead. It may not happen, and you may be forced to sell in order to avoid a foreclosure.
- Not taking all costs into consideration.
In addition to the purchase price of a home, you also need to factor closing costs — which can be anywhere from 3-5% on top. And don’t forget about moving expenses, either! Even a small, local move can cost around $1,000.
- Falling in love with a home.
There are two problems with falling in love with a home. The first is that it can block you from seeing some of its faults — such as a backyard that is too small for your needs, or that the commute to and from work will diminish your quality of life (and add plenty of costly wear and tear to your car). The second is that it can keep you from seriously looking at other homes that may be just as good, if not in the big picture much better.
- Not getting a mortgage pre-approval.
Getting mortgage pre-approval clearly lets you know what you can afford — and what you can’t. As such, you can focus and target efforts. Otherwise, you’re likely to end up wasting your time; not to mention the seller’s and your real estate agent’s, too.
- Ignoring the neighborhood.
Nobody has a crystal ball to know exactly what a neighborhood will look like in a few years time. For example, you may be a Ford F150 enthusiast, and lo and behold: a store that sells accessories like mats and fog lights for Ford F150 models might open up down the street from your new home (hey, you never know!). But still, you want to do your research and get as clear a picture as possible about where your home is located. Pay attention to things like parks, zoning laws, development plans, schools, and so on. Also find out of home values in the area have been rising or falling over time (or have risen, but not as quickly or as largely as homes in comparable neighborhoods).
- Not conducting a home inspection.
All that glitters isn’t gold, and sometimes even the most beautiful homes can have dark secrets — like damaged roofs, damaged chimneys, moldy basements, and so on. Make sure that you hire a professional, credible home inspection professional to look behind the scenes. And if anything needs to be fixed by the seller — like a cracked window or a wobbly front step — make sure that it’s clearly noted in the agreement.
- Not being able to walk away.
Last but certainly not least: you may have found the perfect home in terms of your needs, goals and budget. The neighborhood may be fantastic, and the commute to work may be a breeze. However, the seller may start to drag their heels. For example, they may suddenly demand a significantly higher price, or they want to shorten or extend the closing date. As difficult and frustrating as this is, you need to have the ability and willingness to walk away and look at other homes.
The Bottom Line
Buying a home should be enjoyable — not dreadful. Keep these tips in mind to help you plan and manage your home hunting. And always remember: you’re the customer, and that means you’re in control!