The housing market in South Dakota is heating up – here are 10 mistakes first-time homebuyers make and how you can avoid them.
- Timing Problems. Not planning the move to coincide with the end of their lease often creates a big dent in the budget. Check with your landlord about an early release clause from your lease if you are considering buying a home.
- Looking at Homes You Can’t Afford. You might find that when you do a reality check and start looking in your price ranges that the houses are rather disappointing. Get pre-qualified and then stick within your budget.
- Buying the Wrong Sized Home. Consider how long you plan on being in the property and plan for any lifestyle changes that could possibly happen.
- Buying in a Neighborhood You Know Nothing About. Think about whether or not this neighborhood will make you as happy as the house does. Do your homework.
- Operating on a First-House-Is-Best Theory. Season your eyes by inspecting different types of homes. This will help establish your objectivity after coming from a renting situation.
- Buying a Property That’s Difficult to Resell. Think through all the negatives of the property. Most first-time homebuyers will sell within five to seven years. Think long and hard about how you would sell the home prior to buying.
- Overextending Your Budget. Avoid feeling pinched. Just because you have been pre-qualified to a certain level doesn’t mean you will be comfortable with the payments. Write down everything you spend for two months and that will give you a real picture of your spending habits. Then plan for emergencies, vacations, savings, and upkeep of the new home. You’ll have a much better picture of what kind of payments you can really afford.
- Being Indecisive. Take all the time you need, but don’t be afraid to make a commitment when you’ve found your dream home. Everyone gets cold feet at some time during the process.
- Choosing the Wrong Mortgage. The 30 year fixed rate is not necessarily the best answer. Have your lender show you on paper how much each program will cost you and how they compare with each other.
- Under-Insuring the Property. Don’t forget to increase insurance coverage as the home appreciates in value. Also remember to properly insure the replacement value of your home’s contents as they change and grow through time.
For more information, contact Consumer Credit Counseling Service.
Call us at (605) 330-2700 or (888) 258-2227(CCCS), or check out our web site at www.LssSD.org.