Shopping for a house is not an everyday activity. You might do it once, twice, three times in a lifetime. And because there are so many years — sometimes decades — between moves, most people never really become pros at it. This blog, the first of a two-part series, looks at two of the biggest mis-steps that first-time homebuyers — and seasoned — continue to make.
Mistake #1: Not thinking about tomorrow
The rock band Fleetwood Mac had a big hit with a song whose chorus went like this: “Don’t stop thinking about tomorrow. Don’t stop. It’ll soon be here.”
It’s true! As a homebuyer, understanding your immediate needs is just as critical to your home buying success as understanding your future needs. Unfortunately, most homebuyers consider what’s on their plate when they’re house hunting rather than what their needs will be in ten years.
When it comes time to buy a house, you ought to consider the following.
- Is it possible that you might transition from being a single person to a couple — or from a couple to a family — while living in this home?
- If you’re planning for a family, how big or small might it be?
- Is how close to jobs and schools — and how easy it is to get there — important to you?
- How close do you want your new home to be to friends and family, and how far away from inlaws?
By asking yourself these questions and assessing your needs, you’re likely to make a better long-term buying decision. For example, if you’ve got your heart set on a trendy neighborhood but only afford a one-bedroom apartment there, and you’re likely to start a family in the next three to five years, maybe it’s not the time to buy that particular unit. Remember, the cost of getting into and out of a property can be expensive, so you may want to reconsider the location or the type of property you focus on. Maybe reconsider both!
Buying a home is never a case of “one size fits all.” So, it’s important to be clear about your circumstances. Understanding your needs from the outset can keep you from buying the wrong property now and then having to sell up and start the process again in the future. And going through that hassle could end up costing you tens of thousands of dollars you won’t get back.
Buying mistakes can lead to buyer’s remorse. But you can minimize them by carefully considering your needs and researching which properties your budget will allow you to handle, including the size, type, and location. To better understand your home buying budget, it’s smart to get pre-approved so you know exactly what you’re able to afford. We made it easy to find a loan officer in your area to zero in on what your home buying budget should be.
Mistake #2: Not having a buying plan
Buying a home without a strategy is like fixing a car without having the right tools. You need a strategic approach that leads to you grabbing the keys to your new home without exhausting yourself along the way.
A well-thought-out buying plan should take into account your lifestyle goals, purchasing time frames, and borrowing capacity. Make sure it includes some wiggle room if what you want to buy doesn’t match the reality of what you can afford.
Determine if your plan is for 5 to 10-years or 10 to 20-years. Then adjust what you need to take into consideration for each instance.
- If you have a short window in which to act — maybe you’re relocating and need to move quickly — be honest to yourself on what you’re trying to achieve. Or adjust your time frame to reach your goals, especially if your income or budget is limited. It’s always better to overestimate the total purchase price in your plan and factor in all the possible costs associated with buying. This will help you create a buffer zone that you’ll be able to work within — or better yet, stay below.
- If you’ve been searching for a long time and keep missing out on snagging your dream home, maybe you should modify something in your plan to ensure you reach your home buying goals. Consider rethinking location, prices, property type, number of bathrooms, etc.
- Plan for an exit strategy upfront. For example, how long do you plan to live in your new home? What type of buyer will be interested when you’re ready to sell? What can you do now to make sure you buy the type of place that will be a hot property — no pun intended — when it’s time for you to move on?
Asking yourself these questions now will help you buy a dream home in a preferred location that matches your current lifestyle and budget but still has the best potential for capital growth down the line.
Next week, we’ll have two more mistakes that homebuyers often make. Stay tuned!!