California is famous for its sunny beaches, vibrant cities, breathtaking natural landscapes, and of course, its awesome tacos. It’s also a prosperous place to work and live in. With a state GDP of $3.357 trillion in 2021, California is poised to become the world’s fourth largest economy. No wonder a lot of people dream of acquiring a piece of the Golden State.
While the idea of enjoying California sunsets every day seems enticing, homebuyers should plan and prepare carefully before making this considerable investment. Aspiring homeowners should take note of these mistakes first-time home buyers make and how to avoid them.
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Buying a house but becoming house poor
Let’s say you managed to secure a loan to buy a house even if you have an outstanding debt. Apart from paying the mortgage every month and keeping up with the cost of living, imagine having another debt to pay down. You’re liable to end up being house poor, or someone whose income is disproportionately spent on homeownership. (Being house poor also means buying a house that is beyond your means.)
To avoid this, try to settle all existing debt first before planning to purchase a home. After paying all loans or credit card bills, build an emergency fund worth three to six months worth of expenses. Then start saving up for the home purchase down payment. Once you’ve taken care of the requisites, choose from homes that are well within your budget.
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Not saving enough for the down payment
According to a survey by NerdWallet, one in nine homeowners under the age of 35 think that they should have waited until they saved up for a bigger down payment before purchasing a home. It’s enticing to be able to buy a property with zero to 3.5% down payment, but this might no longer be the case when it’s time to settle those monthly payments.
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Not considering the upfront and hidden costs of homeownership
After buying property, homeowners need to be ready for upfront expenses such as hiring moving services and/or a contractor to repair or spruce up the house. Future homeowners should also have budgeted for monthly expenses. These include electricity, cable, Internet, home insurance, homeowners’ association dues, and of course, their mortgage.
To better prepare for what’s coming, homebuyers should check with the seller and see the utility bills of the last 12 months the house was occupied. Buyers should also consult with their real estate agent to see how much the property taxes and insurance typically cost in the area.
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Not considering the neighborhood
Homebuyers should look for a location that matches their needs and wants. For example, if a buyer is looking for homes for sale in Corona Del Mar, some of the questions to consider would be:
- Are there good schools around the area?
- Are hospitals and grocery stores easily accessible?
- Are there nearby places for leisure and entertainment?
- How far is it to and from work?
These are just some of the questions homebuyers should look into or discuss with their real estate agent.
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Choosing the wrong real estate agent
Working with the right real estate agent can help make the home buying process go smoothly. Homebuyers should work with an experienced local agent who knows the nuances of the local market, fully understands the buyers’ real estate goals,and delivers on promises. .
Clarence and Jennifer of the Yoshikane-Toyama Real Estate Group offer services to help aspiring homeowners navigate the complexities of real estate and get them the best deal possible. Call 714.501.7132 or contact us here to get started.