Planning to buy your very first home? Here are some common mistakes people do when buying their first property.
According to CNBC, the very first mistake people do is borrowing the full amount of money the bank is willing to lend. This tends for people to buy expensive houses or properties that are more than they can actually afford. The general rule is to take 20 percent less than the amount the bank is willing to lend in order to safeguard financial security. Do not overestimate what can only be afforded. Another general guideline is that the total monthly payment should not exceed 28 percent of your gross or pretax income.
Pop Sugar said that another major mistake people make is financing the house with the extra-low short-term adjustable mortgage. Mortgage is something that is always constant when owning a house. A fixed mortgage will be the same 10 to 15 years from now, no matter how the market or economy changes overtime, so it is not very wise to look into adjustable mortgage.
With that, it is also very common for people to use all their cash to buy the house. Cash expenses go beyond the property's down payment. There will also be closing costs, appraisal fees, broker's fees, loan application fees and other costs. These must be taken into consideration when buying a house and budgeting the money on hand. Upfront costs and ongoing costs should always be taken into account.
It is also very important to be smart in buying condos. Always ask if there are any future changes which may result in an assessment for all condo owners. It is essential to buy a home in a community with a homeowners association so that future improvements and renovations can be discussed. This will also let you get to know their neighbors and talk about the different issues in the neighborhood.
