Five Fears That Home Buyers Have
Home buyers have fears that sometimes prevent them from buying. And rightfully so, as buying a home is usually the largest purchase a person ever makes.
A Loss in Property Value
Homes can decline in value. Neighborhoods can gradually decline, newly-built homes can make older neighborhoods less attractive, or an unpleasant development (prison, landfill, highway, etc.) could be built nearby. But you can take precautions, like buying in a low-crime area where the homes are well-kept, primarily owner-occupied and with high-quality schools nearby. You can buy in an area where there are multiple sources of employment, so if one business shuts down or leaves, the entire town doesn't have to move to find work. And you can contact the city to ask about future development plans in the area you want to buy.
Overwhelming Maintenance Costs
All homes have upkeep costs, and many homes have very large maintenance bills. If you become a homeowner, you won't be able to avoid these costs. However, there are numerous things you can do to mitigate and prepare for them:
- Buy a home that has been well-maintained.
- Buy a home that has recently had major components upgraded or replaced (e.g., new roof, new water heater, new plumbing, new electrical)
- Buy a new home (though new homes sometimes have undiscovered defects).
- Regularly maintain your home to prevent small problems from becoming major repairs.
To avoid buying a money pit, you should also have a home inspection before you buy.
Buyer's Remorse
Are you concerned about buying the wrong house? Maybe it's because you don't know what you want. Fortunately, you can solve that problem. Make a wish list that includes features your home must have, as well as features that you'd like it to have but aren't necessary. Look at many houses to see what's available in your price range. If you find a home you think you want to buy, sleep on your decision before making an offer. And don't exceed your budget, as you will quickly regret buying any house that strains your finances. Also, don't be afraid to walk away from a house - new homes are always coming on the market.
Being Unable To Afford Your Mortgage Payment
Many people wonder how they will afford their mortgage. They also might see that the mortgage payment required to afford a home in their area exceeds what they currently pay in rent.
Before you take on a mortgage, set up a budget so you know what your existing expenses are and how much money you take home every month. Also, think about new expenses that will come with home ownership, like water bills. Although your mortgage provider can tell you what they will "give" you, you know more about your finances than anyone else. You MUST be comfortable with the payments. You can also try making "fake" mortgage payments for a few months and see how it affects your finances. If a mortgage would cost double what you currently pay in rent, make an extra "rent" payment every month into your savings account. Can you still live comfortably with this extra payment?
Tricky Mortgages
If you feel that you are not financially sophisticated enough to manage a mortgage, there are two simple remedies to this problem:
First, start educating yourself about how mortgages work, and don't buy a home until you understand what you're getting into. Your mortgage provider should have patience until he or she is sure you know what you need to know.
Second, if you're still uncertain, get a 15- or 30-year fixed-rate mortgage. These mortgages have withstood the test of time and are the most basic and most foolproof mortgages available.
The Bottom Line
Buying a home will likely be the largest purchase of your life, so you're justified to be hesitant. But millions of people, many of them less intelligent than you, have taken the plunge and are successful homeowners. Do your research, make the necessary preparations, and feel confident in purchasing your first home.
(Thanks to Lola Gentile, ScotiaBank)