4 Common Homebuying Mistakes (That Could Cost You Major Money in the Future)
So you've decided to get into the real estate market.
Maybe it was the historically-low interest rates that first got your attention. Maybe you've wanted to be a homeowner for years but this was the first real chance you had to turn your dreams into a reality.
But in pursuing the goal of becoming a homeowner, it's easy to overlook certain expenses and pay dearly for it later.
What are some common homebuying mistakes to avoid? Is there some way that you can avoid losing money unnecessarily during your home search?
You're in luck. We're about to give you a list of house hunting mistakes that could end up costing you major money if you don't know what to look for.
Mistake #1: Forgetting About the Closing Costs
In the U.S, there are credit score goals that aspiring homeowners should try to aim for if they want to work with an A-lender.
But alongside all the hullabaloo about making sure that you don't put yourself in the position of being a house rich and cash poor homeowner, it's also important to make sure that you don't forget about the closing costs.
These are expenses that you have to pay upfront when you're purchasing a home. These can include originating fees, prepaid interest, lawyer's fees, and more.
On paper, these expenses often add up to a few hundred dollars here and there. But according to Business Insider, the average cost of closing fees adds up to $6,087 after taxes.
When you're doing those "How much house will this down payment get me?" calculations, it's important to remember that the expenses don't stop at the value of the home.
Mistake #2: Not Asking About Property Taxes
When you're working with your real estate agent and planning your walkthroughs, asking questions like "So what do the property taxes on this house look like?" can feel awkward.
We get it.
Taxes aren't exactly the kind of topic that makes for a smooth transition between "Look at these gorgeous cabinets!" and "I love the space in this backyard!".
But depending on where you live, property taxes can be the difference between "Yeah this house is totally within my budget." and "Gosh, I'm going to be tapped out every month.".
It's easier to deal with the financial impact of your taxes when you can estimate the amounts and put aside a little bit of every month. But in order to do that, it pays to get an estimate.
Mistake #3: Overlooking Furnishing Costs
Even if you're not looking at high-end furniture, getting decor and furnishings for a new house isn't easy for a couple of reasons:
- First, you've got more square footage to furnish. If you're moving from a condo or an apartment into a full-sized home, chances are that you've got several bedrooms, bathrooms, and a basement's worth of extra rooms to furnish.
- Second, it's not unusual for the pieces that were oh-so-snug in the old apartment to leave you with more empty spaces than you expected in your new place.
Either way, the price of purchasing sofas, love seats, and coffee tables can add up fast when you're going room by room. It may not be an investment you need to make right away. But it's a cost of homeownership that may require you to part with a substantial chunk of change at some point during your homeownership journey.
Mistake #4: Not Looking for Ways to Save on Insurance
Many people think of home insurance costs as another monthly expense that you just have to deal with as much as possible. While there are avenues for insurance savings, like bundling your insurance or signing up through an introductory offer, you may be able to get a discount on home insurance simply by taking steps to make your house more energy-efficient and secure.
Is your walkway lined with the types of shrubs that allow would-be burglars to conceal themselves? Have you installed a security system with cameras?
Believe it or not, these are examples of common-sense changes you can make to protect your loved ones and your property while also seeing the benefits come back to your wallet.
And since you'll more than likely be paying insurance for as long as you own your home, any dollars you shave off of your monthly costs can only help.
When you're buying a house, there are so many things to keep track of and follow up with that it's only natural to begin overlooking things. This is especially the case when you're purchasing a property for the first time.
The good news is that if you know what to look for, sidestepping these homebuying pitfalls can be easier than you think. We've just given you a list of four costly yet common homebuying mistakes. Can you think of any other ways that you could be losing money during your home search?