Three Big Financial Mistakes Home Buyers Make

Custom Smart Homes has good reviews because we know everything there is to know about building homes.  When you’re busy planning to move into a home you designed, it’s naturally to get a little swept up in the excitement.  You’re spending time buying new things for your home, changing your address, and gushing to friends and family members about finally being able to have the home of your dreams.  Buying a new home is very exciting, but it’s also a huge financial commitment.  Purchasing a house is one the biggest financial decisions you’ll ever make, so you want to make sure you do everything right.  If you’re planning on buying a new home, make sure you avoid making these common money mistakes.

Forgetting about added costs

When most people make a budget for buying their home, they usually only factor in costs for the down payment and future mortgage payments.  When you’re buying a home, your money won’t just be going towards the cost of the actually home.  You’ll have to pay for utilities, property taxes, maintenance costs, insurance, and other services.  Talk to utility companies in your area and get an estimate on how much their services will cost.  You could also talk to neighbors and see what they have to say about utility costs.  Regardless of what you do, make sure you set aside funds for other home costs when you’re planning your budget.

Getting caught up in the feeling of “newness”

When some people buy a nice new home, they can get the urge to start buying new things that they may not need.  Your car may be running fine, but you decide to get a new one because the old one just doesn’t look as nice next to your home.  You see a beautiful dining room, and decide to toss out your old dining room furniture so you can get newer and better looking furniture.  Don’t let your finances be dominated novelty and appearance, try to avoid spending money on items you don’t really need once you move.

Putting down a nominal down payment

It may seem like a bargain when your lender says they’ll only require 4% of the total cost as a down payment, but that bargain will come back to haunt you later.  There isn’t anything inherently wrong with paying a cheap down payment, but it’ll leave you with a very small amount of equity in your home.  There’s also the added problem of having to pay for private mortgage insurance.  A lot of home buyers don’t know that many banks classify mortgages with that small of a down payment as “risky”, and to offset that risk banks make the owners pay for insurance in case something happens.  Those insurance payments will last until you have around 20% equity in your home, and that can take years to achieve.