Most people who dream of buying a home, know exactly what they're looking for and what they'd like to spend on the mortgage. However, they don't necessarily consider several important details. You see, along with a hot home buying market comes heavy competition for the homes. And many people are making cash only or unconditional offers. But if you're not familiar with the complexities of purchasing a home, you may have future financial regrets.
02 May 2022
The first one might sound a bit strange, but first home buyers don’t take into account all of their options. And although purchasing a home is often the best financial decision you could make.
It doesn’t work for everyone. For example, if you know, you’ll only be in the home for a year or two, it may not make sense to buy when you consider the interest payments, any payments to do with legal fees, selling a property and so forth. If the market has not rising.
First home buyers may not consider the costs involved in owning a home other than just getting the initial deposit and paying the mortgage. Things like insurance can be significant, as can maintenance fees be. Rates like city council fees and regional counsel fees can really eat up savings and leave you with no emergency funds.
Sometimes first-time buyers don’t get a home inspection before purchasing. They consider that it’s better to take that clause out so that the offer seems more appealing. However, the defects a home inspector may find, far outweighs that benefit. And in fact, they can save you thousands of dollars in future repairs, or at least help you plan for what may be coming up in future. So, you could renegotiate or go in with your eyes open.
Any first home buyers fully consider that the home will appreciate in value, and then dump their life savings into the home, hopefully to keep it for a few years and get a significant increase in the value of their property.
It sounds good, but while home equity is nice, the home is one of those assets that aren’t very liquid, if you need money fast. So that’s something to consider.
First home buyers don’t necessarily consider their debt to income ratio before going to a lender. So the lender considers this ratio when looking at your ability to pay for a home, if you have accrued too much debt, you may not be approved. If you can show a history of saving, not getting into debt before you apply for a home mortgage, then that’s great. Also keep a close eye on your credit score before applying with the lender. And remember, even if you have a pre-approved finance letter from the bank, you’re not guaranteed for the loan.
We saw this recently when some criteria have changed by the government. So if your credit score changes a bit, they may look at that again, or something happens between when you are pre-approved and when you can finally look at paying.
If you’re a first home or novice home buyer, it’s imperative that you spend some time with an expert, such as a trusted realtor before rushing into the home buying experience today. Many home buyers rely on websites to get a false sense of the true values of homes in the area. A great realtor can help give you a reality check on home prices and they keep up with the changes in the current market values. And as well as that, they know how various mortgage companies do business. They can help find ways for you to get the property that you find and the property that you love.