With so much to think about, it’s not surprising that some first-time home buyers make mistakes they later regret. Here are a few of the most common pitfalls, along with tips to help you avoid a similar fate.
Not budgeting for closing costs
In addition to saving for a down payment, you’ll need to budget for the money required to close your mortgage. Closing costs generally run between 1% and 3% of your loan amount. You can shop around and compare prices for certain closing expenses, such as homeowners insurance, appraisal costs, title searches and attorney fees. Calculate your expected closing costs to help you set your budget.
Not saving enough for after move-in expenses
Once you’ve saved for your down payment and budgeted for closing costs, you should also set aside a buffer to pay for what will go inside the house. This includes furnishings, appliances, rugs, updated fixtures, new paint and any improvements you may want to make after moving in.
Buying a home for today instead of tomorrow
It’s easy to look at properties that meet your current needs. But if you plan to start or expand your family, it may be preferable to buy a larger home now that you can grow into. Consider your future needs and wants and whether the home you’re considering will suit them.
Not knowing the limits of a home inspection
After your offer is accepted, have a contractor or home inspector examine the property’s condition inside and out. Don’t be afraid to ask your contractor or inspector to take a look — or a closer look — at something. And ask questions. No inspector will answer the question, “Should I buy this house?” so you’ll have to make this decision after reviewing the reports and seeing what the seller is willing to fix.
Not buying adequate homeowners insurance
Before you close on your new house, your lender will require you to buy homeowners insurance. Shop around and compare insurance rates to find the best price. Look closely at what’s covered in the policies; going with a less-expensive policy usually means fewer protections and more out-of-pocket expenses if you file a claim. Also, we are in the hurricane belt so ensure that hurricane and flood insurance is covered by your homeowners insurance.