One of the first mistakes common to all types of buyers is not knowing what they can realistically afford, both when it comes to the price of the home itself, as well as all other costs, such as down payment, monthly mortgage, closing costs, property tax, maintenance, etc. Not knowing what you can afford is the wrong way to go when buying a home. Even if a bank pre-approves you for a loan, if you know in your gut it isn’t affordable in the long run, you don’t have to accept it. What the bank claims you can afford and what you know you can afford — or are at least comfortable paying — aren’t necessarily the same. You don’t want to end up in a situation in a lot of debt and “house poor.” And you certainly don’t want to face another foreclosure. What’s the solution? Don’t rely on the bank. Ensure you have an accurate budget. List all your monthly expenses, being as comprehensive as possible. Consider all biweekly, monthly, seasonal, and annual expenses. Don’t include your current mortgage (or rent). Subtract your total expenses from your net pay, and you’ll know about how much you can realistically afford. You should also use an online mortgage calculator to help you as well as to research current interest rates. Knowing your budget is essential before you begin the home-search process. Buyers who are ignorant of this, or who make assumptions, could end up in a situation that they’ll regret. Don’t let this be you.
Mistake #2: Disregarding Hidden Costs
A lot of home buyers disregard, or are ignorant of, hidden costs in purchasing a home. If you don’t prepare for hidden fees, you might be in for a surprise. Closing costs are a good example, as they usually include several fees that cover final housekeeping matters, but many buyers don’t factor in this expense as part of the overall cost of purchasing a home. As a homeowner, remember that you’ll have additional expenses on top of your monthly mortgage payment. For example, you’ll be responsible for paying property
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