8 Mistakes You Should Avoid As a New Homeowner
Buying your first home fulfills a long-held dream, but it is possible to make costly mistakes in the process. These 8 Mistakes You Should Avoid as a New Homeowner are often caused by emotion, lack of knowledge, or bad planning.
One mistake many new homeowners make is pouring their financial resources into all-new furnishings as soon as they move in. However, a home doesn’t necessarily need to be brand new to look beautiful. Many people often wonder, “Is a home warranty worth it?” But those who purchase home warranty services have saved thousands of dollars in home repairs.
1. Going with the Lowest Bids on Renovation Projects
Many new homeowners are eager to renovate their home, but it’s important to keep resale value in mind when making renovation decisions. This will help you determine which projects will provide a good return on investment and which ones are overdoing it for your neighborhood.
When soliciting bids, it’s important to get at least three from contractors. Beware of any contractor that has significantly lower pricing than the others; it may mean they are cutting corners or have miscalculated product delivery lead times.
2. Not Asking for an Updated Survey
While a property survey sounds like an obvious step in the home buying process, it can make or break your homeownership experience. Whether it’s an encroachment issue with neighbors, building something too close to the property line or simply knowing what is and isn’t yours, having this crucial document in place is paramount.
It’s common for new homeowners to think that what they see when walking up to a house is the actual property line. However, this isn’t always the case.
3. Not Having a Homeowner’s Insurance Policy in Place
Homeowner’s insurance is typically required by mortgage lenders and offers protection for your financial investment against fire, storm damage, theft, and liability claims. However, there are a lot of factors that can make your home difficult to insure.
These include exotic and wild animals, venomous snakes or serpents, material misrepresentation on an application, and fraud. It may be tempting to skip homeowners insurance in order to save money, but it’s usually not a good idea. Rebuilding and replacing your assets in the event of disaster could be very expensive.
4. Not Having a Home Inspection
Many new homebuyers put their entire savings into purchasing the house, leaving nothing left to cover unexpected repairs. This can lead to the homeowner getting bogged down with debt from home maintenance expenses.
During the market frenzy of 2017 when housing inventory was scarce, buyers often waived home inspections in order to beat out competing offers. But waiving an inspection is a mistake that comes with sizable risks.
5. Not Having a Home Warranty
Home warranties can provide new homeowners with some peace of mind, but there are some important things to consider. For example, they may not cover everything and they might have deductibles.
Additionally, home warranties often exclude components that haven’t been maintained properly. For these reasons, it’s essential to do your research and decide whether or not a home warranty is worth it for you. Most homeowners do carry this warranty to prevent any hassle and headaches on repairs.
6. Not Having a Budget
A mortgage payment isn’t the only expense that comes with homeownership. New homeowners will also need to budget for property taxes, HOA fees and homeowners insurance.
It’s important that new home owners stay in line with their financial goals and not get carried away by a dream house. If surprise income like a windfall or inheritance does come your way, it’s smart to review your budget and see where it best fits. This includes taking into account the 50-30-20 rule, where a percentage of your income goes toward debt repayment and savings.
7. Not Having a Home Inspection Report
A home inspection provides valuable information to potential buyers. It helps them decide whether to pull out of a sale, renegotiate the original offer, request repairs or a repair credit or move forward with the purchase without any action.
Home inspectors usually provide a key to help buyers and sellers understand what each element of the report means. The key will include symbols or letters that denote the severity of a problem. Safety concerns are given greater priority than general repairs.
8. Not Having a Home Maintenance Schedule
Homeownership comes with a lot of responsibility. Whether you’re renovating your house for resale or planning to live there for years, following a routine maintenance schedule is essential.
There are many indoor and outdoor chores that should be done on a weekly, monthly or yearly basis. For example, you’ll need to change HVAC air filters, shut off water spigots before winter and restock your fire extinguishers. Set reminders and
create a calendar to keep yourself on track.