Financial Pitfalls All First Time Buyers Should Avoid

When you’ve achieved financial independence or met the person you want to settle down with, then buying a home is a natural first step for many. It’s a way of declaring to the world that you have a space that is yours and yours alone and the act of taking an empty house and transforming it into a home is a beautiful and exciting experience.

Image Credit: geralt (Pixabay)
Image Credit: geralt (Pixabay)

Buying your first property is a fairly unique experience as it straddles the line between being a labor of love, and being a financial exercise. With that in mind you have to go into buying your own home wearing two very different hats (not literally… unless you really want to). Your new home will be a place where you’ll make happy memories with your family, but it’s also an investment. Reconciling your nesting instinct with financial shrewdness can be a tough balancing act. Even if you plan to live in your home for the long term, you still need to go into a prospective purchase with an investor’s mindset.

Luckily. by avoiding these stumbling blocks, you can find yourself on your way to happy and profitable home ownership!

Don’t fall in love with a property you may not be able to afford

A lot of people tend to shop with their heart, which often means aiming at the top end of their budget. These properties may be beautiful but are they realistic?  Will you be able to manage your  monthly finances in this new property? If the subprime mortgage debacle taught us anything, it’s that the amount a bank says you can borrow doesn’t always match what you can comfortably afford to borrow.

By all means, go for your dream apartment. Just make sure you factor in all your additional monthly commitments and debts on top of your potential mortgage payments.

Keep your expectations realistic

You probably have a wishlist of boxes your new home needs to tick but bear in mind that many of us wait decades before can afford somewhere that ticks every single box on that wishlist. You may need to make some concessions as a first time buyer. If you find a place that is a fixer-upper with potential, it may be worth waiting a few months while you make some improvements and renovations before you can call it home.

Know the property

Even a home you don’t intend to leave can become a money pit. Avoid finding yourself stuck in an equity black hole by researching the property’s value relative to the surrounding properties in the area and make sure you get a surveyor to assess the shape of the property before you commit. It also helps to identify areas where you can add value by making improvements or renovations.

Take advantage of the help and support that’s out there

The property market can be intimidating to a newcomer, but don’t be afraid to ask for help or advice. Your first step should be to develop a relationship with a local realtor, who’ll be ethically obliged to act in your best interests as well as in those of the seller. While your parents or peers may also be on hand with plenty of advice, it’s always best to seek the help of the professionals first.

 

*Disclosure: This post was submitted on behalf of PennyMindingMom.com.

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