Simple mistakes that can cost you that dream home

10 Simple mistakes that can cost you that dream home

You have finally decided to take the plunge and enter the property market as a first time home buyer. Searching for that perfect home is exciting, exhausting and yes, a little bit scary as well. Your home search should culminate in a home that you love and you can afford. A simple premise, surely! But the path to achieving that dream is often marked with obstacles and mistakes. Here, we discuss 10 simple mistakes made by first time home buyers.

  1. Disconnect between what you CAN and CANNOT afford: What the bank says you can afford is not really the same as what you know you can afford. We cannot stress this enough. You need to make a budget listing your monthly expenses including all bills, annual vacations, loan repayments, insurance premiums, household expenses and retirement savings. If you have to increase your savings to afford the type or size of home you desire, you need to reduce your expenses or increase your income even before you begin your search.
  2. Poor credit: You must have a healthy credit record as well as a stable income to be pre-approved for a loan. If your loan application is rejected, you would have wasted everyone’s, and especially your own, time and effort.
  3. Additional expenses: Remember your expenses are not confined to home purchase. There will be additional expenses other than the monthly EMI payment. There will be property taxes, home insurance, association fees, repairs and maintenance that your new home might require as well as cost of interior décor. Factor all these costs into your calculations.
  4. Don’t be inflexible in face of funds crunch: Sometimes first time home buyers have to compromise on certain fronts due to limited funds. Hence, it makes sense that you do not continue renting for very long after you begin paying your EMIs. If you really want to have your new home have everything that’s on the list; that’s fine too. But you do have to take a call on whether you want to continue to make 2 monthly payments in rent and EMIs and whether you want to be a homeowner now or 2 years later.
  5. Self-research: Keep a check on market trends and value of property. Your self-research will help you compare and choose the best available option for you.
  6. Look at the larger picture: Perhaps the decor seems outdated; perhaps the wallpapers are ugly and garish. But does the home meet your requirements in terms of location, neighbourhood, size? If your answer is yes; don’t let these small aspects turn you away. Remember that remodelling and redecoration can be done at a later stage and are often way cheaper than paying for a house with the perfect décor.
  7. Look for a home with potential: The secret to a good home buy? Look for a home that’s not yet achieved its full potential. When you add value to the house, you raise its equity for when you want to sell it.
  8. Inspect the home to avoid financial mistake: It’s tempting to go straight to transaction when you see that perfect home for your perfect family. Please don’t! Before you close the sale, find out how good a shape the house is in. Always be ready for repairs but you must not be faced with unexpected repairs or expensive ones.
  9. Inferior interiors/striking exteriors: It’s always a bad idea to buy a home with striking exteriors over inferior interior work. Inferior interiors will only result in increasing expenses.
  10. Future of the new neighbourhood: Find out what are the prospective development plans for the locality in the future. Will your street become a major street or will it resemble a highway twice a day? Find out about the zoning laws in the locality, what kind of prospective construction may come up and whether prices have seen a steady decline in recent years. These answers can help you predict the value of the locality in future.

Keep these points in your mind while buying home and make the best choice out of the available options. Happy Hunting!