We often hear advice too late to save ourselves time, money and hassle. For home buyers, mistakes come with added zeroes at the end. Here are some of the best kept secrets that home buyers need to hear so they don’t make unnecessary mistakes when buying a home.
Home Equity Is Not a Savings Account
Your home equity should not be seen as a savings account. As you build up home equity, it should remain there unless absolutely necessary. Cashing out equity from your home to pay for a car, pay off credit card debt or redecorate is not a necessity. Many people tap into home equity for debt consolidation and then go back into credit card debt, but now they lack the home equity that moved them closer to the day they would no longer have a house payment.
While home equity loans come with a lower interest rate than credit card debt, you pay more in fees and interest taking out a home equity loan than you would if you had a proper emergency fund. If you are buying a home, set aside a couple thousand dollars to pay for replacing a dead furnace or fixing a hole in the roof or paying for the little repairs you find the property needs.
If a house needs major repairs to fit your vision of an ideal home, maybe you’re better off finding a better home than buying a property with existing home equity and then looking for a cash out refinance to renovate it. Another option is negotiating down the purchase price of the home based on your list of needed repairs and desired changes.
Living in a Home Repair Show Is Not Fun
Fix and flip shows make it seem fun and exciting to buy a house, repair it and then sell it for a hefty profit. A few supposed gurus suggest you buy a fixer-upper on the cheap, make the little repairs in your spare time, and you’re either left with a far more valuable home or have a home ready for resale on your own schedule. Both of these scenarios are not recommended for several reasons.
First, the average home buyer doesn’t have time to live their lives and fix stuff on the side. Do you really want to choose between going out and repainting a bedroom? Or do you want to spend evenings and weekends fixing floors, painting walls, and troubleshooting glitches? Second, most home buyers don’t have the skills to repair most things DIY, while the barely passable work they do will be seen as a strike against the home when it comes up for sale later. Third, and perhaps the most important, is the hassle this creates in day to day life. The problem with do it yourself repairs during your free time is that you’re left with a half usable kitchen for a week when professionals could do it in a day. The renovations to a bathroom done by amateurs leave the whole family using the untouched bathroom for a month, and woe be to the fools who try to renovate both bathrooms at the same time. Now you get the horror stories of having a working toilet on one side of the house and the only good shower on the other side. This is aside from the legitimate fears of someone falling through a ceiling trying to put in more insulation or getting shocked trying to rewire something.
In reality, it is simpler and safer to pay the professionals to repair everything and make the changes you want before you move in. And if their bill is higher than you’d like, maybe you need to look for a house that is actually move-in ready.
Understand What You’re Getting
Understand what you’re getting when you buy the property. For example, you need to know exactly where the property boundaries are so that you don’t get into a dispute with neighbors when you try to plant hedges along what you thought was the property line. Don’t assume that large open space past the doghouse is yours; it may belong to someone else.
Another variation of this theme is an understanding the obligations that come with the home. You aren’t just buying a home with a pool; you’re taking on the time and cost of maintaining it or the greater cost of paying someone else to maintain it. The green energy upgrades may come with extra work, such as checking on the batteries or scraping snow off the solar panels in the winter.
Then there are issues like homeowners’ associations. Will you be obligated to pay fees for the privilege of living in the neighborhood, whether for the community pool or the mandated lawn care service? Are there bylaws saying you must decorate for Christmas?
Consult with your Grande Prairie Mortgage Broker today to receive FREE advice on your next purchase!!!