6 Things I Wish I Knew When I Bought My First House
New homebuyers have made every mistake in the book – I even made a few myself when I bought my first home. They’ve overpaid, overspent, and bought homes they just could not afford. And most of the time, these critical missteps happen simply because buyers aren’t informed or don’t ask the right questions. It’s painful to watch, especially when a huge percentage of buying blunders can been avoided.
I wish I hadn’t borrowed the full amount the bank told me I could afford
Just because you’re approved for it doesn’t mean you should buy the most expensive house you can. As a general rule, it’s wise to take 20% less than what the bank will lend you. Let’s say you go to a bank or a mortgage broker, and after evaluating your finances, income, and savings, you qualify for a $400,000 mortgage. Though it may be tempting to take the full amount, knocking a fifth off the loan amount – which comes to $320,000 instead – will automatically get you into a house that’s more affordable, safeguarding your family and your financial security.
I wish I hadn’t been suckered in the by the extra-low short-term adjustable rate mortgage
Always go with a traditional 30- or 15-year fixed loan – and skip adjustable, creative financing, balloon payments, and teaser loans. You never know what life may bring, sovhaving consistent mortgage payments for the entire length of the loan allows you to better predict your ability to pay each month. A fixed mortgage offers confidence that the payment you have today will be the same ten or fifteen years from now, no matter how the market, interest rate, or the economy changes over time.
I wish I hadn’t used up all my cash to buy the house
Your home purchasing costs don’t stop with the down payment. You have to factor in closing costs, appraisal fees, buyer’s broker fees, loan application fees, loan broker fees, structural inspection fees, and so on. The down payment and the closing are what I call the “up-front costs.” After that, you’ve got “ongoing costs,” which primarily consist of property taxes, homeowners insurance, hazard insurance, condo, co-op, or HOA fees, and moving expenses. Don’t be left with a zero balance in your checking account by the time you get the keys; factor in these additional costs ahead of time.
I wish I hadn’t wasted my time hunting down those foreclosures and short sales, only to miss some really good deals
Just because it’s a distressed property doesn’t mean it’s a good deal; foreclosures aren’t a guaranteed bargain. If you looking to get a steal (and you want it in a timely manner), avoid short sales, and even some foreclosures. These deals can drag on for months and generally have higher interest rates. And even if the distressed home you’re looking at is well-priced, the hoops you’ll have to jump through may just have an opportunity cost high enough to offset your monetary cost savings.
I wish I knew the one essential question to ask before I had bought my condo
There’s one question that can save you thousands of dollars and help you avoid a condo building (or community with a homeowners association) that will become a money pit: Has there been any discussion of possible future improvements, changes, renovations, or maintenance or any financial difficulties that would result in an assessment or charges to be leveraged against all condo/home owners? Make sure to get the answer in writing. This question is critical because the condo association board must answer honestly or it could be held liable. All condo meetings must provide notes that can be subpoenaed, so any discussion of assessments, current or future, could be proven.
I really wish I had talked to the neighbors before I bought the house
A few years back, I bought a wonderful home in the Las Vegas. Unfortunately for me, I did not follow my own advice and mingle with the neighbors to learn about potential problems ahead of time. And it caused me many sleepless nights – literally. My first night in the house, I woke to the sounds of two barking, yelping dogs that howled and bellowed until morning. I couldn’t believe it. The next night the same thing happened. I later found out that the seller had been fighting with the neighbor over the barking dogs for six months. The surrounding neighbors had also been complaining, but the awful, miserable owners of the dogs just didn’t care. It took me more than a year of working with L.V. Animal Control before the owners agreed to take responsibility for the problem. I was unable to put the house on the market for an entire year, because I would have had to disclose the problem, and I would have had to take a steep discount prior to resolving the issue. Otherwise, I would have been liable for not disclosing, just as the man who sold the house to me without disclosing it was. Had I chatted up neighbors, I would have been much less tired all year long!
We all make missteps when we do something for the first time. It happens, it’s life, but buying a home is one of those things that’s just too important to flub. Keep in mind these common mistakes to ensure that you buy safe, sane, and secure when it comes time to close on that home.
Buying a house is not always an easy thing but we have to fight hard to make the American dream come true. Owning a house is one of the best things some one in american could accomplish.