July 17, 2024
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Four Foolish Mistakes That Many First-Time Home Buyers Make

Buying a home is one of the biggest decisions you will ever make in your life. It signifies that you are ready to take another step in building your life. To ensure you don’t look back on your closing day with regret, avoid these four common mistakes that most first-time homebuyers make. It is so easy to get starry-eyed at all the amazing houses available for sale and excited about a new location, but before you know it, you may be over your budget and trying to rationalize how you ended up with a home that wasn’t a good fit for your pocketbook.

A large lot, a backyard to play in, and no adjoining neighbors can seem like a great deal when you are used to apartment living, but there is more to house hunting than finding a place you love—you also need to find a place that fits your budget, your lifestyle and your goals. Before you start house hunting, take a moment and read over these suggestions to avoid these foolish mistakes. Forewarned is forearmed.

  1. Optimism

First-time home buyers are often a little too optimistic. They project how much “house” they can afford on their future incomes. This is a big mistake. While you may be on track to be the next president of your company, graduate med school or get a raise in six months, you should not include that extra income until it happens. That promotion, new job or raise may not come through—and then where will you be? You cannot predict the future, so be frugal about your finances.

Choose a home based on your current income. If you truly believe your financial situation will change for the better in the near future, either wait on purchasing a home until that promotion, new job or raise does come through or plan on purchasing a starter home and moving to a new home when you have additional income.

  1. Overspending

Overspending is another huge mistake many first-time home owners make, not realizing the negative impact it will have on their credit. There are countless tools online to help you determine how much you can afford to spend on a mortgage payment, plus you can always talk to a financial advisor or sit down with your realtor or mortgage professional for some real talk. Keep in mind also that you do not need to buy a home for the full amount that you have pre-approval for. You need to make sure you have sufficient cash left over each month to put some aside for the maintenance your home will inevitably need.

Think about your current rent payment. Has that amount been easy for you to afford? Would it still be easy if you had to pay additional utilities (larger homes mean more water, gas, electricity etc)? What if you needed to scrape together enough to replace the roof or boiler or repair the furnace? Once you sit down to do the math, you might find that you can afford less than you thought. That’s okay. You will be better able to make your new house a home when you aren’t worried about how to pay for it all.

  1. Underestimating

Many people also forget to include all additional costs of home ownership in their calculations. After all, when you had an apartment or a rental, it was easy. You had one payment to your landlord and possibly another to your utility providers. It sounds simple, but home ownership is not that easy. When you buy a home, you have a myriad of different costs for which you need to account. In addition to your mortgage payment, you might need mortgage insurance. You will also definitely need to pay for property taxes and home insurance. Plus, you have your homeowner’s association (HOA) dues on top of all that. Next up, you have the cost of maintenance. Mowing the lawn every week, shoveling the snow, caulking windows, leaky faucets, repairing shingles after a windstorm and other such costs can really add up.

  1. Utilities

Additional expenses to consider are utilities. If you have been using the same figures you pay at your current residence, you may need to rework the numbers. Most first-time home buyers are moving into a space that is larger than their current homes—and more space means that it takes more to heat and more to cool. There are also more lights to turn off, and other changes to your lifestyle. Your water bill may increase from gardening as well as your gas bill as you start cooking big family meals. You might decide to purchase larger appliances than you currently own, or you could find that your new home has an older and less efficient HVAC system.

Buying a new home is very exciting, especially for a first-time buyer—but it is also a risky investment. Make sure you are taking the time to figure out what truly works well for your financial future.

For more tips about buying and selling your home, visit Malka’s Facebook page: www.facebook.com/MalkaAbrahamsNJ/.

By Malka Abrahams

 Malka is a realtor with Links Residential in Teaneck. She is a long-time resident of Bergen County, with extensive knowledge of the area. She is committed to educating her clients and guiding them through both the buying and selling process. Malka is a member of the National Association of Realtors, the Eastern Bergen County Board of Realtors and the New Jersey MLS. Contact Malka at 201-739-9654 and [email protected].

 

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