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Buying a real estate property is an exciting venture for everyone. Having something to call your own is something to be proud of, and the promise of a nicer quality of life is one that most of us want. However, this same excitement clouds the decision-making process and may cause people to commit costly mistakes—and millennials may be committing more of them if they’re not careful.
Millennials have been entering the housing market in ever-increasing droves. Since 2013, 37% of the market has been made up of millennials. However, nearly two-thirds of these millennial buyers have regrets about the house they’ve bought.
To help you to avoid the same fate, we've listed down eight of the most common mistakes millennials and first-time homebuyers commit.
1. Going in without a plan
Would-be house buyers should not dive into the market without a plan, as it could end up costing you more and make the process more difficult than it needs to be.
Before diving headlong into the housing market, you should be aware of your financial position and the situation of the real estate market. Be honest with yourself and decide whether you will keep this house for the long term or plan to sell it and move on to a bigger property later on.
2. Focusing too much on the house and overlooking the location
A good mindset to have when buying a house is that you're not just buying four walls and a roof; you're also buying a location.
While a house's structural soundness and aesthetic appeal should be a significant factor to consider in a home purchase, do not forget to take into account the neighborhood where the property is situated before fully committing to the purchase.
3. Not practicing due diligence
The house buying process is generally a long and arduous endeavor, but that does not mean that you should skip out on the most important (and hardest) responsibility you must do: the house inspection.
It is the buyer's responsibility to visit the site and inspect the property's structural integrity before going through with the purchase. Hire the services of a property inspector and make sure to tag one along on the day of the inspection.
4. Not getting pre-approved
The property buying process should ideally start with the buyer going to a lender to get pre-approved for a loan before looking for a property, and not the other way around. Getting pre-approved will help you narrow down your choices based on what the loan amount can afford and, thus, help you avoid overspending. It will also signal to the seller that you are serious about buying a house.
5. Not taking other expenses into account
Buying a property is costly in itself. What buyers don't realize is that many hidden costs should also be factored into the budget. These extras include home owner's association dues, property taxes, transfer tax, home insurance premiums, emergency repairs, and upkeep.
6. Going all-in with your savings
Do not over-extend your finances when buying a house. Apart from the other costs associated with purchasing a home, one must not forget about the monthly amortization that needs to be paid for the years to come. Make sure that you have enough cash in your rainy-day fund so that an emergency will not cause you to default on payments and eventually foreclose on your house.
7. Not saving up for a bigger downpayment
According to a survey, 11% of millennials regret not saving up for a bigger down payment. While saving up for a bigger down payment may delay the timing of your purchase, it will reduce the monthly amortization you will have to make in the long run and, as such, reduce the strain on your budget.
8. Letting emotions and sentimentality get the best of you
Buying a house is more than just buying a roof for you to sleep under; this is also where children are born, where meals are shared, and where memories are made. Home buying will get emotional and strike your sentimental heartstrings at some point.
While all of that is just normal, you should not let it dictate your purchasing decision. It is best to approach home buying as a business decision. After all, a lot of money is on the line. As such, you should treat it as you would any other investment.
Bonus tip: Take your time
Buying a house is one of the biggest decisions that you will ever have to make. It will also have a significant impact on your finances for the years to come. Take your time in doing your research and consider all possible alternatives.
The finish line to this arduous process is you putting your feet up in a comfortable house in a good neighborhood (that you can afford) where you will make memories with your family to cherish forever.
Author: James Sab Labrigas
Author Bio: James Sab Labrigas is a Marketing Officer for HTLand, Inc., developer of Mandani Bay. He remains inspired at work through remarkable green architecture and interior design projects. Outside of the property and real estate industry, you may find him painting, playing volleyball, or doing photography.
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