1) Not staying on budget
When you see the “perfect” home out of your budget, it’s always tempting to stretch your dollars to close the deal. However, that’s a dangerous trap your income might decline or the real estate market might depreciate. When that happens, you might not be able to make ends meet. This is why it’s important to get pre-approved for a loan and only limit your search to properties that are within the limit.
2) Forgetting about added and hidden costs
On top of the sale price of the property, there are other fees such as closing costs, property taxes, homeowners insurance and more. In addition, your monthly budget will be more than your mortgage repayment as there will be maintenance costs and utilities fee etc. So it is good to have an estimated monthly living cost before signing an offer.
3) Allowing your emotions to decide for you
Getting emotionally attached to a property can affect your decision making, especially costing you to spend more than you can afford. It’s important to prioritize the most important criteria before your start searching. Make a list of the most important qualities such as location, rooms, updated interior etc. Then decide what are some of the criteria you can live without which will help narrow down your choices.
4) Not following through with a proper inspection
Spending the extra money with a trusted inspection will save you a lot of money in the long run. Perhaps the property has water damages that are hidden under cosmetic renovations. Perhaps there are unlicensed renovations done to the place that might be hazardous to your family. These are things that only a professional can tell you. And of course it’s fundamental to choose someone that you trust.
5) Taking on a reno property without necessary skills
There are times where we think DIY is as easy as what we see on TV home improvement shows. Which is how you end up with paying a lot more for renovations after purchasing a property. If you are a handy person it’s perfectly fine to pick a reno property that you can tackle. But if you are an average Joe/Jane, try not to think that paying less for a reno property is a better deal than paying more for an updated property.
6) Not being prepared for unexpected delays
Do not leave everything up to the last minute. Some people think that saving on an extra month of rent is smart but there might be problems with closing or other situations might cause delay in moving. Or your mortgage rate might change before you can close on the property. That’s why it’s always better to leave a bit more room when dealing with a real estate transaction.