As long as someone goes about it the right way, buying a home is a smart investment. Going about it the wrong way, however, can lead to much stress as well as financial devastation. For those looking for a home in the Lexington, KY area, take comfort in knowing the real estate market is booming here. To keep things going smoothly, let’s take a look at five of the top home-buying mistakes that should be avoided at all cost.
Mistake 1: Buying with the Intention of Moving
Many people make the huge mistake of buying a home only to know they will be moving within the next one to three years. This is a big no-no. No matter how well mapped out a person thinks he or she has the real estate market, things are likely change, meaning there could be no one interested in buying or renting the home a homeowner wants to move from. For those who know they will be moving in the next few years, it’s usually best to stick with a rental property.
Mistake 2: Going Over Budget
When it comes to buying a house, there’s a good chance a lot of money is going to be spent. For someone spending $150,000, going over this budget by $5,000 may not seem all that bad. However, adding this money and the associated interest to a mortgage payment could mean the difference between affording a mortgage loan and having to file foreclosure. When preparing a budget, home shoppers must be realistic about what they can afford, and even more importantly, stick to the budget once it’s created.
Mistake 3: Forgetting about Additional Costs and Fees
There are many added fees when it comes to purchasing a home. From closing costs to homeowners insurance to appraisal fees, all of these need to be accounted for. If they aren’t, a person very well may be able to afford the monthly mortgage payment, but the added fees could be what causes them to go under.
Mistake 4: Emptying Out Savings to Make a Down Payment
Saving up for a home can be difficult. Even so, it’s still important to put money in a savings account, and even more important that it doesn’t get spent. When making a down payment on a home, a savings account should not be emptied. With a bit of searching around, it is possible to find a mortgage lender who will accept only five percent of the purchase price as a down payment. Although making such a small down payment may result in a longer term loan, having extra money in the savings will be worth it.
Mistake 5: Not Understanding the Mortgage Loan
When a home buyer doesn’t understand the mortgage loan he or she is going into, there is a good chance that at some point the loan will become too much to handle. All parts of a mortgage agreement need to be in writing, and most importantly, a home buyer needs to read carefully through this agreement before signing it.
Buying a Home in Lexington, KY
It’s a really good time to buy a home, but only if a person goes about it the right way. With a bit of patience and common sense, anyone can make a smart home purchase.