When you're looking to buy a house or apartment, there are so many home buying mistakes you need to avoid. Not only are you going to spend a huge amount of money over the years, but it's also your home, so it's vital to make the right decisions. Here are some of the home buying mistakes you need to be wary of …
Table of contents:
- bidding war
- not getting a survey
- buying a fixer upper
- thinking with your heart
- legal issues
- spending up to your limit
- thinking short term
1 Bidding War
One of the home buying mistakes people can make is to get into a bidding war. Realtors want to get the best price for their vendors, and can sometimes give the impression that a lot of people are interested in a home. This is to make you raise your offer so that you don't lose the house. Ask for evidence of other offers, and don't offer more than you think the house is worth. Be prepared to walk away if they try to push you too high.
2 Not Getting a Survey
The costs of buying a house add up, so it's tempting to save money where you can. But with such a major commitment, this could be a false economy. Always get a full survey, so that you are aware of any potential structural issues. Otherwise you could be hit with some massive bills if the house turns out to have problems …
3 Buying a Fixer Upper
Buying a fixer upper can be a good way of getting a bargain. It's one way of affording a home that you couldn't afford if it were already in perfect condition. But remember to factor in the costs of renovations and compare to what the house will be worth once fixed up. Some things you can fix as and when you have the funds, but you'll need enough to get the house into liveable condition.
4 Thinking with Your Heart
Since this is going to be your home, you'll want to buy a place that you love. But you'll also need to put your business head on and look at it as a financial transaction. It's the biggest purchase you'll ever make - and you'll also pay a lot of interest if you have a mortgage. So don't just think with your heart.
5 Legal Issues
If you're buying a home with someone else, make sure you are aware of all the legal issues involved. Whether it's your partner, a friend or a family member, you should know what your rights and obligations are. If you're buying with a friend or relative, decide what you would do if one of you wanted to sell or move in a partner.
6 Spending up to Your Limit
It's rarely wise to stretch your finances to the limit. Just because the bank has offered you a loan of a certain amount, you don't need to borrow that much. Taking a smaller loan gives you room for maneuver; it's better to put down the largest deposit possible. This will give you a cushion if house prices fall, and protect you to some degree against interest rates rising.
7 Thinking Short Term
Finally, always take the long term view when buying a home. The costs involve make it uneconomical to buy if you're likely to move in a few years. Also plan for life changes like starting a family. There's no point buying a small apartment if you want to start a family soon.
Buying a home is such a massive commitment that you really do need to make smart decisions. Make sure that you are informed and have thought everything through. What would your ideal house look like - or do you already live there?
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