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Home buying mistakes

First-time buyers and golden-agers looking for retirement comfort can both make the same mistakes when purchasing a new home. Motivated to find the “perfect house”, often people buy houses based on emotions, and not on good sense. Taking the time and care to make a truly educated decision about what house to buy will ensure that the purchase will prove its value over and over again in the coming years. Here are few considerations to keep in mind on your next “new home” excursion:

  1. Don’t buy if you plan to move again within five years. The housing market is improving but is still not stable enough to guarantee that you’ll get your money back if you try to sell it sooner rather than later. Consider renting until you are ready to settle in for the long term.
  1. Establish your finances: this is more than just getting preapproved for a mortgage.
  • Check your credit report and score. Your credit rating will impact the interest rate you’ll pay so clearing any black marks off your credit history and raising your score will ultimately save you money.
  • Get preapproved for your mortgage before starting the search. It will be easier once the credit score is optimized.
  • Establish the down payment amount (and plan to stick to it). The higher the down payment, the less each monthly mortgage payment will be.
  • Establish (and plan to stick to) a budget for move-in and moving costs. Agreeing to a sky-high mortgage payment will be painful when you don’t have the credit available to purchase a refrigerator. And don’t believe that a “new house” also means “new everything else”. Unless you’ve determined a budget to cover that level of expense, find more reasons to love your old couch.
  • Search for added monthly costs after move-in. Potentially higher rates for utilities, HOA fees, etc., may eat up more of your monthly income than you expect; be prepared.

  1. Research, research, research:
  • The neighborhood where the house is located matters. Look for homes in neighborhoods you already like; that’s easier than trying to find a neighborhood around the house you just moved into.
  • Contemplate the future even before it starts – research the resale value. Review the factors that determine if a house will retain or escalate its value over time, such as characteristics of the surrounding neighborhood, existing or planned civic improvements, transportation opportunities and the like.
  • Talk to the right people. Local real estate agents will help you find a house that matches your preferences in a neighborhood that tickles your fancy. Talk to more than one to find the best fitting agent, too.
  1. Managing the time between choosing the house and closing the deal:
  • Don’t skip the inspection. Hidden faults can escalate costs. Some states require their home inspectors to be licensed. If you live in one, check with the licensing agency to ensure your inspector has a sound record.
  • Get it in writing. Sellers may promise that the hot tub and exercise equipment are part of the deal but unless you have that in writing, be prepared to find those empty spaces on move-in day.
  • Be reasonable with contingencies. They may provide a hedge against moving too quickly into a bad deal, but setting impossibly high expectations can sink the deal and cause a lot of headache for you and others involved.
  • Don’t fall in love yet. Getting attached to a potential new home before the deal is done can cause you to make agreements or concessions that have unwanted consequences. Be prepared to walk away right up till the moment you sign that purchase contract.

Keep your head clear and your eyes wide open when shopping for your next house. Contact us to find the house that will truly fulfill your dreams of home.