First-time Homebuyers: Make Foresight 20/20
With any first experience, mistakes are bound to happen as you tread unfamiliar territory. As Atlanta’s real estate sizzles, the inventory crunch eases and mortgage lenders begin to ease underwriting standards, more hopeful homebuyers are taking the plunge into buying their first home.
Buying your first home can be a daunting task. Because the stakes are so high, one bad mistake can be financially and emotionally devastating. Luckily for today’s first-time homebuyers, there is a wealth of online information to help you avoid the typical pitfalls of buying a home and help you learn from others’ past mistakes. We discuss some of the top mistakes new home buyers make, many of which can be avoided by planning responsibly for the future and not allowing yourself to get too swept up in the thrill of making your first home purchase.
Forgoing Home Inspection
According to the American Society of Home Inspectors, 10 percent of newly purchased homes aren’t inspected. A $500 two-hour inspection (a rough estimate) can save thousands of dollars in damages later while educating you about the home under consideration.
It’s important to remember that a home on the market has been “spruced up” to accentuate its best features and minimize its potential flaws. You need to make certain that the things you don’t see are in good working order. To protect yourself, it’s wise to make the purchase of the home contingent on your approval of the home inspection report. Learning upfront about water damage in the attic, foundation cracks, gas leaks or that the AC unit is about to go will offer you more leverage when making an offer. Depending on the results of the inspection report you can decide to reduce your offer, make the seller responsible for repairs or you can back out of the deal altogether.
“It takes a trained eye to be able to see the problems that can exist in a home,” said Bill Loden, president of the American Society of Home Inspectors. “The inspection can also give the first-time buyer a bit of a schooling on the house and how to maintain it.”
Too Much Online Faith
Though Zillow and Trulia ease many burdens of home shopping, some people consider the two listings websites, as the be all and end all. However, relying exclusively on the Internet for listings can give you a skewed cost of actual value. The recommended value of the property online isn’t necessarily what the seller believes it to be or even what it’s actually worth.
Online listings also can’t accurately portray neighborhood friendliness, the view from the balcony, surrounding nightlife or other factors that may be important to you.
Just like you wouldn’t solely judge a person based on their online profile, you shouldn’t base your decision about a home merely by looking at its online profile. It’s important to check out any homes of interest in person to get a true feel for what the home has to offer.
Overlooking Hidden Costs
Unfortunately, even though you feel ready to be your own landlord or purchase a home that your future children can grow up in, it doesn’t mean you’re financially ready. Homeownership costs extend far beyond monthly mortgage payments and the costs accrue even before you sign the contract. When looking at your finances, make sure you factor in closing costs, moving costs, the home inspection, escrow fees, home insurance, property taxes, costs of repairs and maintenance, possible homeowners association fees and more.
Buying a home shouldn’t be a financial strain and stressor. The purchase of a new home should be an exciting experience that ultimately elevates the quality of your life while serving as an investment in your future. Before you take the plunge, take the time to avoid common pitfalls and factor in all financial aspects to avoid drowning in stress and debt.