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Top Mistakes Made by First Time Home Buyers
Buying a home will no doubt be one of the biggest purchases you ever make. As a first time home owner, you need to be especially careful to plan out your property purchase. You need to look at your financial needs, as well as your long and short term for the property. Leading property portal Lamudi takes a look at the key mistakes first time home owners make.
Lamudi Kenya Managing Director Dan Karua said: “You need to take precautionary measures which will safeguard you from undergoing a financial nightmare as you climb the property ladder. It is important to do due diligence before you buy a house, taking account of all the information available through the Ministry of Lands.”
Poor financial planning
Homeownership does not come cheap so you need to plan your finances accordingly. Most first time homeowners underestimate the costs that they will incur. There are additional costs that amount to almost ten percent the value of the house that you will need to take into account in the planning stage. Additional charges you will need to plan for include: stamp duty, which ranges between two to four percent of the value of the house depending on its location; loan appraisal, which is about one percent; and the remaining five percent to be spent on insurance and legal fees. If possible, meet with a lender to get pre-approved for a loan. This will guide you through the house hunting process and in managing your expectations for your ideal house.
Not considering the resale value
As a first time homeowner, you first house will not necessarily be the one you will live in until retirement. Therefore, you have to keep the option of reselling in mind when purchasing the property. The property is also a long-term investment so you need to consider the potential return on investment over the coming years.
Not conducting a home inspection
An inspection is essential for every house purchase. It will help you to know the repairs that need to be carried out in your house. You will need to hire a professional home inspector to conduct this for you. The home inspection should cover the structural features of the house - including the electrical system, plumbing, pest and mold infestation - as well as the general condition of the house. This will ensure you get value for money, while avoiding incurring the cost of repairs that the seller should be liable for.
Not having agreements on paper
The rule of thumb is that all real estate agreements should be on paper. This is the only binding document of the sale. The seller may back out of the sale after the offer has been made or not meet to the expectations that you had set together. It is highly advisable that every agreement made between the seller and buyer should be on paper as verbal agreements are not legally binding.