These are the most common mistakes Grande Prairie first time home buyers make, and we’ll tell you how to avoid making these mistakes yourself.
Buying More than They Can Afford
There are several ways someone buys too much than they can afford. One is buying a house that is too big in the hope that you’ll use all that space, though you end up paying for the space whether you use it or not. Another mistake is buying a home that truly stretches your budget, and then you’re unable to save for retirement or pay down debt because everything goes to pay for the house. Another variation of this mistake is buying a home in a higher status neighborhood hoping that looking successful will translate into success. The book “The Millionaire Next Door” found that buying a home in the hope of appearing successful or wealthy is actually counter-productive to your goal of becoming wealthy. When you’re spending more on house payments, taxes, decorating and social pressure to spend on status symbols, you end up with nothing left over to save and invest and end up becoming wealthy.
Buy a home you’ll be able to live in for at least a few years, but don’t stretch your budget hoping that your family will eventually use all the space. Don’t buy property in the hope the status symbol will lead you to status or success.
Not Considering All the Costs
The price of owning a home is not just the mortgage payment. If you’re buying a condo or house after living in a bills-paid apartment, you’re now going to be paying utilities and property taxes. For condos and some townhouses, you may have to pay condo fees or association fees. You’re now responsible for maintain the property, whether cutting the grass or replacing the roof in a few years. Expect to pay at 10% of the value of your mortgage payment in maintenance costs; this cost is lower on a new home but higher if you’re buying an older home.
Another mistake is failing to take closing costs into account when you’re planning on the cost of buying a home. You may pay the closing costs up front or you may roll them into the loan. However, this will be paid eventually. There are additional costs, too, like property inspections, realtor commissions and legal fees.
Find out all of the costs associated with both the purchase price of the home and ongoing expenses related to owning it.
Buying It Because of How It Looks
Home sellers are coached regarding the importance of the home, especially the exterior of the home. They pick up toys in the yard, clean the porch and repaint the exterior. After all, a home that looks like it is unmaintained from the outside causes someone to scan for other signs of neglect and brokenness inside. Unfortunately, too many home buyers think that the first impression is the true measure of the property. They fall in love with the pictures of the front of the home or the spacious back yard, not caring about the costly foundation repairs it needs, evidence of flood damage or deferred maintenance you will literally pay for later.
What truly hurts home owners is to skip the home inspection because you assume the new paint is a sign of care, ignoring the fact that it may have been done to cover up structural problems. Always have the property inspected by a qualified and neutral third party.
Not Shopping around for a Mortgage
It is a major mistake to not shop around for a mortgage. You could find radically different offers on interest rates, fees, closing costs and loan terms. You can truly save yourself a lot of money by visiting a Grande Prairie mortgage broker to find the best mortgage for you.