You graduate college. You start your career. You find the love of your life. You buy a home.
You might not complete these milestones in that order, but most young Americans judge their success in life by how many of these action items they’ve completed. Fortunately, the first three are relatively straightforward; unfortunately, the last one is not.
Buying your first home is incredibly complicated, not to mention expensive. However, many young adults jump into home searching without enough research and end up ruining their chances at happiness and financial solvency. If you are in the midst of looking for your first home, you might be jeopardizing your future by practicing any of the following terrible home-buying habits.
You Don’t Know What You Can Afford
You shouldn’t blindly trust lenders to tell you what you can afford in a home. Instead, you should spend a month or two tracking your expenses — including contributions to emergency savings and retirement accounts as well as insurance premiums or vacations — to get a near-perfect picture of how much of your income is already accounted for. Whatever leftover pay you have can go to buying your first home. You can input this figure into a mortgage calculator to get a more feasible payment estimate before you acquire first-time home-buyer loans.
You Aren’t Factoring in Additional Expenses
Your down payment on a home might be the single biggest amount of money you’ve spent in your life, but that chunk of change and your monthly mortgage are far from the only expenses associated with home ownership. Home owners must pay property taxes, and how much you add to your annual taxes will depend on the value of your home and your location. Additionally, you will need to pay home insurance, which is more expensive than renter’s insurance. You might even be required to pay homeowner’s association fees in addition to expenses to maintain your own property, such as a lawn mower or new exterior painting. Houses are significant investments, even beyond the initial purchase.
You Keep Putting off Qualification
It is imperative that you qualify for a mortgage before you shop for a home. Many agents and sellers won’t even work with homebuyers who lack pre-qualification because it is a sign that they won’t be able to acquire the loan when they want to buy. As soon as you decide you want to buy a home, you should seek pre-qualification at least — and you might even go so far as to get pre-approved for a loan. Then, agents and sellers know you have good credit and are serious about your offers to buy.
You Never Decided What’s Important
You might have a general idea of what you want in a house, but if you don’t commit those ideas to paper and highlight their necessity to your agent, you’ll probably end up buying a house that just isn’t right. You should spend time mulling over why you want to buy a house in the first place: the extra space? The privacy? The equity? Then, using that defining goal, you should make a list of imperative features for your future home.
You Are Nit-Picking
It shouldn’t be a deal-breaker if your master bedroom has hot pink walls, and it isn’t a permanent disaster if your living room has 70s-era cheap wood paneling. Cosmetic changes are relatively easy and inexpensive, which means they shouldn’t much influence your evaluation of a potential home. Similarly, there are plenty of repairs that significantly decrease a home’s price but really don’t cost all that much to fix. You should allow yourself to imagine your ideal home, but you shouldn’t be too inflexible in your vision to prohibit minor imperfections. Once you own the home, you can make all the cosmetic changes you want.
You Aren’t Picking Enough Nits
Then again, there are some imperfections that make it worthwhile to walk away. Serious damage to the roof, foundation, wiring, and plumbing can mean the home is a money pit and definitely not worth your investment. You should be careful not to get carried away by glamorous touches within a home, like new hardwood floors or granite counters. Instead, you should evaluate the bones of the house — and hire an experienced home inspector to do the same.
You Don’t Have Your Own Representation
You might think yourself smart for buying a home without your own agent, but any money you save is lost in the time and effort it takes you to do all that work yourself. You shouldn’t rely on the seller’s agent to act in your best interest, and you shouldn’t expect to find your dream home using online resources like Zillow and Trulia, which everyone has access to. Buyers’ agents have the skills and secrets to get you your dream home in no time, and they are well worth the relatively minor expense at closing.
Join the free Master Your Money course!
Join the free email course and finally learn how to manage your money better, pay off debt, save more money, and reach financial freedom.