By Maggie Park
When you were a kid, did you ever beg your parents to let you learn from your own mistakes? While this argument is a favorite among preteens looking for a good time, it’s a poor way to manage your finances. Here are some common mistakes that cause serious home buying headaches. If you avoid these blunders, you will have a good chance of enjoying your new home rather than making your own list of regrets.
Tip 1: Don’t fall in love. Your home is your biggest investment, so you need to be as clear-headed as possible as you shop. Sometimes Cupid encourages buyers to spend beyond their budget. Sometimes buyers overlook structural flaws or overestimate how well they will be able to correct cosmetic issues. Sometimes, buyers simply disregard obvious red flags like a questionable location or a daunting commute. Don’t fall in love, and you’ll avoid these mistakes.
Tip 2: Be mortgage savvy. Most experts suggest that the mortgage payment, including taxes and insurance, total between 25 and 28 percent of your monthly take-home pay. Get pre-approved for this amount. Not only does pre-approval give you bargaining power, it also gives you a concrete budget. Once you’re pre-approved, continue to guard your good credit. Don’t purchase a car or an appliance before you close, and definitely don’t open a store credit card. Keep your financial picture exactly the same as the day you got pre-approved, and your closing will be uneventful.
Tip 3: Know the neighborhood. As you shop, pay close attention to the neighborhood. Realtors know the most pleasing routes into and out of neighborhoods. It’s your job to visit likely neighborhoods at different times of the day using a variety of different entrances. For a reality check, it’s a good idea to commute to work from your target area. Notice signs of declining neighborhoods. These may include unkempt public spaces, business closures, an excess of "for sale" or "for rent" signs, and many homes lacking curb appeal.
Tip 4: Pay attention to schools. Even if you don’t have children, you should care very much about school zoning. School quality drives many purchasers’ decisions. Therefore, your home will be more valuable and much easier to sell if you live near great schools. Despite lower home prices, avoid areas where the local schools are in decline. A quick Google search will give you test scores, college attendance rates, and even the percentage of students who receive free lunches.
Tip 5: Use a Realtor and ask questions. Some buyers are embarrassed about asking their Realtor too many questions. This reticence is a huge mistake. Your Realtor has a wealth of knowledge about not only the home-buying process but also about neighborhoods, trending designs with the greatest resale potential, renovation specialists, home inspectors, taxes, and much more.
Tip 6: Constantly revise your wish list. First, write a list of attributes you think are "must-haves." Next, as you shop within your price range, consistently revise your list. You may find that something you thought was an absolute necessity is less important than other items on your list. Without consistent assessment of your true needs and an appropriately revised wish list, you may end up in a house that looked good on paper but is a daily disappointment in reality.
If you use these six tips to guide you, you will be able to avoid some common home-buying headaches. Won’t it feel nice to know that you truly did find the right home for your personal financial situation by learning from the mistakes of others?