Buying property is a long-term financial commitment. You should think of buying a property as an investment in your future, not just a short-term goal. While you may want to get into the market quickly, it’s important to remember that you will likely live in this home for a while and will need to afford repairs and renovation in the future. When purchasing your first property, there are some things to avoid. This guide will walk you through a few of those common mistakes.
Not Factoring in All Expenses
In addition to the cost of purchasing the property, there are a number of additional expenses that you should consider when buying your first home.
- Property taxes: You will have to pay property tax on your purchased property every year after purchase. This can range between 1–3% of its value per year, depending on where you live.
- Home Insurance: This is another vital expense to consider when buying your first property. Homeowners insurance protects against damages caused by fire or other natural disasters, theft and vandalism, and liability claims. The cost varies depending on what coverage options you choose.
- Home Repairs: When planning your home budget, you must plan for repairs. Purchase a home warranty that covers minor work or save money to cover repairs such as plumbing issues, appliance work, and big-ticket items such as water heaters and AC units.
Opting for a Fixer-Upper
Opting for a fixer-upper can sound ideal, especially when you’re buying your first home and don’t have much cash on hand. However, there are several drawbacks to buying this type of property. While the seller may reduce the home’s sale price to cover some of these costs, the repairs can still cost the buyer thousands.
Depending on how many things need repairs or upgrades and whether those issues cause unseen damage, these problems could require expensive repair work from professionals. It may be more cost-effective to get a construction loan and build from the ground up.
Skipping the Inspections
Another thing to avoid when buying your first property is trusting the seller’s diligence. It’s easy to assume that the seller performed all the necessary inspections and is honest about the condition of their property. Unfortunately, this isn’t always the case. The best thing to do is schedule an inspection before you make an offer on the house. This will give you peace of mind in knowing what needs repairs and how much it will cost.
There Is More to Buying a Home Than Just the Mortgage
There are many reasons why people choose to rent instead of buying a home. When you’re ready to purchase your first property outright, knowing what to expect will help you avoid making costly mistakes.