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Buying a home can be confusing, especially for first-timers. One common source of confusion is figuring out how much home you can afford with the loan amount you’re approved for. If you’ve ever watched “Property Virgins” on Home & Garden Television, you’ve likely seen this scenario play out.
In the show, the real estate agent takes homebuyers around a neighborhood and asks them to guess the selling prices of the homes. They often guess way too low, highlighting the misconception of what’s within their price range.
Assuming that a particular neighborhood is in your price range is one of the most common mistakes first-time buyers make. Let’s explore other common mistakes and how to avoid them
  1. Not preparing for the purchase: Just as you wouldn’t go car shopping without knowing your budget, you shouldn’t house hunt without financial preparation. Failing to prepare your finances and consult with a lender about a mortgage can lead to missing out on your dream home.
  2. Spending too much: Being pre-approved for a loan gives you a maximum borrowing figure. Many first-time buyers only look at homes at the top of their price range, leaving no room in their budgets for emergencies or maintenance costs. Determine a comfortable monthly payment that allows for savings and emergencies, and aim for a home price below your maximum borrowing limit.
  3. Falling in love: It’s easy to fall for a house’s aesthetics, but it’s crucial to look beyond the surface. Consider the floor plan, flow, and how the house suits your lifestyle now and in the future. While falling in love is fun, it’s the long-term relationship with the house that truly matters.
  4. Poor timing: Real estate markets can be buyer’s, seller’s, or balanced. Buying a home in a buyer’s market allows for leisurely browsing and negotiation, while a seller’s market demands quick decisions and adherence to seller terms. Understand the current market and work closely with your real estate agent to avoid missing out on your dream home.