Almost Everyone Makes These 5 Home Buying Mistakes, According to Graham Stephan
Written by
Ashley Donohoe
Edited by
Nicholas Morine
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Especially if you’re a first-time homebuyer, you can encounter challenges navigating a current real estate market boasting high mortgage rates, low home inventories and rising prices. Unfortunately, you can face regrets if you don’t thoroughly consider all your costs — or you rush into making an offer.
A recent YouTube video from money guru Graham Stephan explored five big home buying mistakes that almost everybody makes.
1. Not Considering Maintenance Costs
Many homebuyers only think about affording the monthly mortgage payment and forget about taking care of the property. As inflation has boosted material and labor prices, home maintenance expenses can quickly cause regrets for the unprepared.
Stephan emphasized the need for a comprehensive inspection report for planning for future maintenance. He also said, “Unless you go and buy a brand new construction, just assume that you’re going to spend anywhere from $500 to $600 a month in repairs and maintenance or 1% of the property’s value every single year for just things that come up.”
2. Buying a Home Too Quickly
When the housing market is tough, it’s easier to jump into buying a property that might not be the right fit. While compromises are often necessary, not doing enough research about the home’s location can lead to regret when there’s a lot of noise or crime.
Stephan recommended first checking out the property at different times of the day so you’ll know what you’re going into. Plus, you should see what the locals say about the neighborhood.
3. Spending Too Much
Whether it’s due to a too-expensive home or a high mortgage rate, spending too much can cause long-term financial strain. Avoid regret by setting a reasonable home budget and not bidding more than that amount, even when it’s tempting. And as a rule of thumb, try to limit your mortgage payment to a maximum of 28% of your monthly pre-tax earnings.
You should also check with multiple lenders for loan estimates, especially as even a small rate difference can significantly impact your interest over time. Stephan advised showing lenders the quotes you get in order to see if they’ll offer you a lower rate.
4. Choosing a Fixer-Upper
Getting a less expensive fixer-upper might seem like an easier path to home ownership. However, the potential work and costs might have you rethinking your purchase, unless you’ve done your research ahead of time.
Stephan outlined two assumptions that potential buyers of such properties should make when considering renovation and upkeep: “One, it’s going to cost 25% more than you assume it will, and two, it’ll take twice as long as you think to complete.”
5. Feeling Pressured Into an Offer
Stephan talked about how excitement and concerns about future property prices can pressure buyers into bidding. Along with not getting the best home price or mortgage rate, this mistake can lead to buying properties with serious problems.
To avoid regrets from a rushed purchase, make sure that you’re financially stable, that you plan to live in said home for quite some time — and finally, that you’re buying the home for the right reasons.
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