Buying a home is an exciting but daunting experience, especially if it is your first home.
It could possibly be the largest financial transaction you will ever make and therefore it is important that you are properly prepared to ensure you make a good purchase decision.
To help you prepare, let’s look at 9 Common Mistakes made by Home Buyers – ones that you should avoid.
1. Not being prepared
Before taking the plunge into the hunt for the perfect house, the smart home buyer will understand his assets, be aware of debts and obtain pre-approval for finance.
It is also important to understand your family's daily living requirements and what matters most to you and your family when choosing a house. How many rooms do you need, how many bathrooms, what size yard do you prefer. Also remember you are not only buying a house but also a location. Consider what you are looking for in a neighbourhood, do you need schools nearby, is there easy access to transport, what is the crime level, are there any upcoming zoning or development issues.
2. Buying beyond your means
Just about everyone who has ever bought a house knows the feeling of looking for a home that fits your budget verses that much more expensive property that seems to have everything you would ever need..
It's human nature for us to want a little more than we can afford but buying a home that is way out of your price range could impact your finances well into the future.
Bear in mind that there will likely be interest rate rises at some point and if you are already stretching the budget from the start this will result in quite a shock to the budget. Remember to allow for changes in your future circumstances such as the possibility of changes to your career or starting a family.
3. Not having your finances ready and/or choosing a mortgage that does not suit your needs
The best negotiating position to be in, is to have your loan pre-approved before you go house hunting.
Many banks have online calculators on their websites which can give you an indication of how much you can afford and what the repayments might be but you can't simply rely on these. There could be a huge difference between what a bank indicates it can lend you and what it will actually lend you.
It’s important to pick your finance package very carefully and to make sure you understand it.
4. Price is not the only consideration
We all know you can make money when you buy a property but that doesn't mean you must buy cheaply. Price is what you pay but value for money is the goal. This means you should not make your buying decision solely on price. For example, a cheap house in a noisy location might be very hard to sell down the track and that's not a good position to be in.
Once you have found the right property, in the right location, it is important to make an educated offer so that you get value for money and do not overpay. It is a good idea to obtain a comparative market analysis which will show recent asking and sales prices of other homes in the same neighbourhood.
5. The price is not the full cost
Understanding the full costs associated with buying a house is paramount. There are acquisition costs, stamp duty, rates, valuation costs, loan application fees, mortgage insurance, legal fees and so on.
Then there is the cost of moving into your new home and any unexpected expenses, such as a hot water system breaking down. Owning your new home also means you will need to budget for insurance, home maintenance and repair costs.
6. The “I am over it” Purchase
You have been looking for your perfect home for a quite a while now and so far things are just not coming together. You are tired of looking and have had enough of the experience - you are 'over it'.
This is when buyers can make the big mistake of buying a property out of desperation. Sick of the emotional rollercoaster, they buy something 'that will do' rather than something that really 'suits their needs'. They often live to regret this decision for a long time.
If you are feeling this way, it would likely be best to stop looking for a while or enlist some help in the process.
7. Not making sure your interests are protected in the Contract for Sale
Never sign the Contract for Sale until you are sure your interests are protected.
Don’t be fooled by thinking you can make changes or seek an extension later. Once the contract has been signed, the seller doesn't have to agree to your requests for change.
8. Doing it alone
Don't do it. A Contract for Sale is an important and binding agreement and fully understanding what you are signing could save you from some major consequences. Contact our office to arrange an appointment to discuss the legal aspects of your contract with our highly experienced conveyancing team.
9. Thinking this list is all you need to consider
It’s not. There are many other issues to consider but, hopefully, this will help you avoid a few common mistakes as you prepare to buy your new home.