When all of your friends are taking that step and buying a home, you start thinking that maybe the time is right for you. If you are ready to become a homeowner for the first time, Dave Ramsey warns to avoid these common young home buyer mistakes…
- Rushing into a Purchase: “You’ve got plenty of reasons to believe now—and only now—is the right time to buy a home. Hot markets, hot interest rates—even hot pressure from friends and family can convince you that you’re missing out on the opportunity of a lifetime if you don’t act today! But the truth is, rushing into a purchase before you’re ready could cost you big bucks in the long run. Here are a few good reasons to hold off:
- If you’re new to a city, give yourself several months to a year to settle in to determine the area of town you like the most.
- If you’re unsure how long you’ll be the same city, hold off purchasing a home until you know you’ll be there long enough to put down some roots.
- If you’re newly married, give yourself time to adjust to life as a couple.
The timetable to purchase your first place depends on one thing: your readiness. So don’t let well-meaning outside influences, favorable market conditions or low interest rates make the decision for you.”
- Not Saving Enough Before You Buy: Buying a home takes time and patience. It’s definitely a decision that needs preparation. Likely, you aren’t paying cash for your new place, so Dave recommends the following:
- Pay off all your debt, and build up an emergency fund of three to six months of expenses.
- Limit your monthly mortgage payment to 25% or less of your monthly take-home pay.
- Have at least 10% for a down payment on a 15-year fixed mortgage. A 20% down payment is even better because it helps you avoid paying private mortgage insurance (PMI), which only increases the size of your monthly payment.
- Buying Too Much House: Dave says,”Don’t make the mistake of buying a decked-out dream home when you can only afford a basic starter house. Begin your home search with realistic expectations about how much house you can get for your money, then focus on what’s important. For example, choose a neighborhood in a good school district if you think you’ll have a family in the future. But don’t overspend on a 3,000-square-foot home when all you need is 1,500 square feet.Here are a few tips on how to keep a level head during your house hunt:
- Write down your house-size needs versus wants.
- Discuss your expectations with your spouse.
- Ask for feedback from your real estate agent.”
- Not Budgeting for Closing Costs, Property Taxes and Insurance: Buying a home includes many other fees that you must consider. Don’t forget to include the items listed below in your budget and ask your real estate agent, lender or other homeowners for other items you might not be considering:
- Property taxes
- Homeowner’s insurance
- HOA fees
- Disregarding Your Real Estate Agent’s Advice: A piece of advice from Dave, “While this might be your first home-buying experience, your agent has been around the block a few times. Literally. Here are a few ways your agent’s expertise goes well beyond their ability to find you a great home:
- They’ll explain offer terms.
- They’ll walk you through the home inspection process.
- They’ll help you understand closing requirements.
Your agent is on your side, so lean on them during the entire process. A good agent will help you make a confident, educated decision about your future.”
Are you ready to make the move? We would love to help you out! This is one of the biggest decisions you will make in your lifetime, so put your trust in our team. Your satisfaction is our number one goal. Call us today @ 720-593-2014. We can’t wait to help you through this journey and make your real estate dreams come true!