Buying a home is harder than it looks. As the economy and housing market is on the rebound, many new homeowners will be faced with some of the most common pitfalls that people experience when they purchase their first home. Most of the pitfalls are financial. Many people aren’t fully aware of the fiscal responsibilities before they make an offer on their first property. Like most people, you might think you have the money to purchase a home, but there are many costs you might not be factoring in to your total budget. Falling in love with a home and then realizing that it is out of your price range can be devastating. Here are some common money mistakes that first-time homeowners make.
One of the biggest money mistakes of first-time homeowners is not spending the time getting pre-approved for a loan, which is the easiest and best way to balance the budget they need to buy a home in the first place. This is truly the most important step of purchasing a home. Before you look at properties you want to know what you can afford. The last thing you want is to go in over your head and spend far too much on your mortgage. There is also the opposite end of the spectrum where you can purchase a house, then realize that you could afford much more – but the former is much more common.
Another mistake is thinking that foreclosed homes are a great bargain. Sure, you might be getting a home for pennies on the dollar, but what about all the renovations? It has been roughly five years since the housing bubble burst, but the high water mark is still visible in the scores of homes that are owned by banks and just lying in ruins. Before you put in an offer on a foreclosed home, make sure you take into account the extent of the renovation costs.
Furthermore, many homeowners don’t take into consideration all the other expenses that go into owning a home. For instance, there are annual upkeep costs, mortgage interest rates, property taxes, utilities and all kinds of insurance. If you are in Florida where there are many natural disasters, like hurricanes and even sinkholes, homeowners insurance is critical so that you don’t risk losing everything. You can get homeowners insurance in Florida provided by Getfloridahomeinsurance, but you want to include this on a list with all of your other expenses – just so that you can get a real idea of how much it actually costs to own a home.
Lastly, most new homeowners make the mistake of not getting the best price on their homes. Many newbie homeowners believe that they need to make a bigger offer to a real estate agent in order to secure a home in a relatively competitive housing market. While this might get you the home of your dreams fast, you might be spending hundreds of thousands of dollars more than you have to be spending. Just make sure that before you make an offer on a home, you look at the other offers and try to outbid them, but don’t sink yourself financially.