4 First-Time Home-Buying Money Mistakes You Can Easily Avoid
When buying your first home, it is easy to make mistakes along the way. Luckily, by being prepared, you can avoid some of the major money mistakes first-time home buyers sometimes make that put them in a financial bind.
#1 Failing to Save for Closing Costs
When it comes to buying a home, you don't want to put all of the cash that you have into your down payment. You also need to make sure that you save some cash to cover your closing costs. Your closing costs are calculated as a percentage of your overall mortgage. The exact percentage can vary, but a good figure to aim for is 5%. So if you want to purchase a $200,000 home, you want to save 5% or $10,000 for closing costs. Make sure that you set aside money for the down payment and closing costs.
#2 Failing to Save for Other Closing Expenses
In addition to the closing costs you have to pay to your mortgage lender, there are other closing expenses that you will need to factor in. You will need to pay for a home inspection. You are going to want to pay an attorney to do a title search to ensure the title to the home is clear before your purchase the home. You are going to need to accrue homeowner's insurance and pay your first premium on that as well.
These costs can easily add up to another couple thousand dollars on top of the mortgage closing costs.
#3 Failing to Save for Moving Expenses
Moving from one home to another takes some money. Generally, you need to at least rent a moving truck or van. Then, you have to purchase boxes, tape, markers, and bubble wrap. Depending on your time and physical capabilities, you may also need to hire movers to help you.
You will also need to clean up your old home and new home or hire someone to do that for you. You need to be able to afford the actual moving process.
#4 Failing to Save for Move-In Expenses
Finally, there are going to be expenses that are associated with moving into a new home. You may need to purchase new blinds, window coverings, and rugs. You may want to repaint the inside of the home. If the home doesn't come with all the necessary appliances, you will need to purchase those as well. You are going to need to have some money to make small fixes to the home as well as purchase furniture items you will need for the new home.
As a new home buyer, you need to save up for more than the down payment. You need to budget money for the closing costs and expenses as well as moving cost and move-in expenses. Make sure that you have enough saved up before you start the home buying process.