When you decide that it’s time to move out of your parents’ house, usually you have no other option but to rent a home. However, once you get a job and your finances improve, you realize that the costs of renting a home are pretty high. Therefore, you might consider buying one. This can also be a good investment in your future if you decide to lease it. Nevertheless, since you’re not a real estate agent, there’s a lot you don’t know, and you can make many errors. So if you’re looking for a place in Chicago, here are seven mistakes first-time home buyers make that you can avoid.
No. 1 Not getting preapproved
Since buying real estate requires a lot of money that most people don’t just have lying around, getting a mortgage is typically the preferred solution. But the mistake that most first-time home buyers make is beginning the house-hunting process without getting preapproved for a loan. This is a problem because even if you find your dream house, you might not be able to purchase it. And another mistake is only getting prequalified for the loan. In this case, you get an estimate of how much you could get, but you have no guarantee that the amount will be approved.
No. 2 Not saving enough
Once you decide to buy a home, it’s important to be well-organized with your finances. Make a savings account to know exactly how much money you have. And put everything on paper. Many first-time home buyers make the mistake of only saving for the down payment. But in fact, buying real estate involves many other additional costs. Here are a few examples:
- Closing costs. Even though some loans require a down payment of only 3%, you need to know that the closing costs can amount to around 5%. These can include property taxes, loan insurance, appraisals, application fees, etc.
- Homeowner’s insurance. Usually, you are conditioned by the loan provider to obtain homeowner’s insurance. This covers your home and everything inside it. Unfortunately, insurance companies use various means of calculating the premium, so you can’t know in advance how much it will be.
- Moving expenses. Many people don’t even factor in the costs of moving into their new home, which is a big mistake. You indeed have the option of DIY moving, where you manage the entire process on your own. However, experts from Reebie Storage and Moving suggest that this might cost you a lot more time and energy, not to mention all the items that can break if improperly packed and transported. So, to stay safe and avoid mishaps, consider hiring some specialists. It will allow you to avoid common DIY moving mistakes that result in damage.
- Repair costs. It rarely happens to find a recently-built property that you can buy. And even if you do, it might still require some repairs. Nevertheless, if the real estate is older, the repair costs might amount to half of the purchase price. Therefore, it’s important to get estimates from contractors to know what to expect.
No. 3 Buying more than you can afford
When you get preapproved for the home loan, you might find out that you’re eligible for a more considerable sum than you expected. But even though this means you can afford a bigger home in a better location, it doesn’t mean that you should take it. Again, it’s essential to put it all on paper. Will your monthly income cover the mortgage payments, the utility bills, and all the living expenses? Don’t make the mistake of buying a bigger home than you can afford.
No. 4 Not having a long-term plan
Buying your first home is exciting, but you should have a long-term plan in mind when you begin your search. Of course, you don’t have to grow old in that home, but it’s good to think ahead. For example, if you want to have kids at some point, the space needs to be big enough to accommodate them, and it’s important to have good schools in the area. If you don’t consider all of this now, you might realize that your home no longer satisfies your needs a few years down the line.
No. 5 Skipping the home inspection
One of the biggest mistakes first-time home buyers make is skipping the home inspection. At the moment, you might think that it’s a wise decision because it saves you some money, but it might end up costing you a lot more. First of all, home inspectors evaluate the state of the home to make sure that it’s livable. But apart from this, they will tell you if any major repairs need to be done. It’s imperative to know this in advance to determine if you can afford those additional costs. Moreover, it’s also valuable for negotiating the purchase price. So, consult your real estate broker for recommendations on good home inspectors.
No. 6 Making emotional decisions
Buying your first home in Chicago might be a dream come true, so there are a lot of emotions involved. Nevertheless, you have to control your emotions and not let them take over. After all, this is a considerable investment, and you have to be realistic about what you can afford. It’s important to discuss everything with professionals and your friends and family to make sure that you make the best decisions for yourself.
No. 7 Rushing or waiting too long
There’s a fine line between rushing into a purchase and waiting too long. You should never rush to make an offer on a home if you’re not sure that it’s the right fit. This is one of the most significant investments you’ll ever make, so you have to be sure it’s what you want. However, if you wait too long to make an offer, you risk someone else buying your dream house.
Buying a home is a significant investment – but it’s also a very satisfying one. However, if you’re doing this for the first time, there’s a lot you don’t know, so mistakes are bound to happen. Nevertheless, there are some mistakes first-time home buyers make that are avoidable. So, be well-organized, plan everything, consult experts in Chicago, and talk to your family and friends. This way, you will make the best decision for yourself.