When you’re finally putting all the money you save into your dream home, it can be pretty exciting. But before you make a deposit or apply for a home loan, there are some things that you need to know. The home buying process, after all, is filled with potential mistakes that can be costly, so you want to do what you can to avoid them.
If you are a first-time homebuyer, though, you might not know what those mistakes are. Don’t worry. FinanceCorp has rounded up three of the most common mistakes that you should avoid when you buy a home:
Mistake #1: Applying for the Wrong Home Loan
Is there such a thing as a wrong choice for a home loan? Indeed there is! As a first-timer, you may get overwhelmed by the number of mortgage solutions to choose from. It doesn’t help that the terms used can be confusing – fixed rates, variable rates, interest-only, principal and interest payments, and more! It’s easy to just apply for the first loan that is offered to you.
That’s a blunder you shouldn’t commit, though! You should compare the different home loans available to you and consult with a trusted friend or family member. If it’s too late and you’ve already been approved for the loan, and you find that it’s not working for you, you might want to consider refinancing your loan to another lender or product.
Mistake #2: Deciding Based on Your Emotions
While emotions are a strong driving force when you’re buying a house, you should still try to take a logical approach and not an emotional one. Even if you think you found your dream home, do not get carried away and show too much excitement or show a willingness to pay higher to secure the property.
Don’t let your excitement cloud your judgment, and instead of focusing on the shiny hardwood floors, the plush carpets, or the shade of the paint in the bedroom that you’ve “always dreamed of,” focus on more important elements. For instance, if you have kids, is the home safe for them, and are there schools and hospitals nearby? Will public transportation be easy? Do you think the property will grow in value? These are just some of the questions you need to ask yourself before making a deposit!
Mistake #3: Borrowing More Than you Can Afford
A lender might tell you that you are eligible for a certain amount of loan. Does that mean you max it out so you can afford a bigger or better home? Not at all! Do not base your decision on what the lender tells you – not if you cannot repay that loan comfortably. When you purchase a home that’s out of your price range, that could really hurt your finances in the next few years or even decades! So never be tempted to apply for a loan that’s beyond your limit.
It’s best to have a budget set in mind before actually house-hunting and tell your agent to look only for houses that are within a specific range so you won’t be tempted to get a bigger loan for a home that, in reality, you can’t really afford.
These are just three of the most common mistakes that homebuyers commit. You see, the process of home buying and applying for a mortgage can be pretty complicated so you should be careful as you navigate them. Do your due diligence and don’t dive into things blindly – do your research, make sound comparisons, and be logical about your decisions. This is, after all, one of the biggest investments you’ll make in your life.
When you’re ready to make a home purchase in Perth, FinanceCorp can provide you with financial solutions that suit your needs. All of the Finance Managers at FinanceCorp are fully qualified, trained, and experienced mortgage professionals who live and breathe finance. Contact us today to know more!