Everyone makes mistakes when buying a home for the first time. Many of these errors are easy to fix, but some lapses in judgment can cost you thousands at closing or leave you with an unmarketable real estate investment. If you don’t want to be on the receiving end of a bad deal the next time you’re buying a house, you should make sure to avoid these four fatal blunders.
1) Busting your budget. There’s a reason it’s important to stick to a budget when buying a home. If you spend more than you can afford on a house, the payments will come back to haunt you – no matter how nice it is. A good rule of thumb to follow is that your total monthly debt, including your mortgage payments, shouldn’t exceed more than 36% of your income.
2) Forgetting the inspection. After buying a home, you should always pay professionals to inspect it for faulty wiring, malfunctioning air conditioning and other problems. An inspection typically costs $300-$600, and although that might seem steep, you could end up spending thousands more on repairs if you decide to skip it.
3) Paying the sticker price. Busting your budget on a new house is one thing, but spending too much on a home because you paid the sticker price is a blunder of epic proportions. Like buying a car, you should never pay sticker price on a real estate investment. You can count on paying thousands less than the asking price if you’re willing to haggle – and you should always be willing to haggle.
4) Picking a bad location. A nice house won’t do you much good unless it’s in a desirable neighborhood. If your community is run-down and dilapidated, you probably won’t enjoy the time that you spend there. Worse yet, when you try to sell the house, you won’t see nearly as much money for it as you paid.
Buying a home isn’t hard as long as you know what you’re getting into. It’s okay to make a misstep every once in a while, but these four cardinal home-buying sins should be avoided at all costs.
