We all make mistakes. That’s how we learn in many cases. Here is a list of common mistakes home buyers make in all age groups.
20’s – Getting the wrong mortgage
Some young buyers get ARM’s, which are adjustable rate mortgages since they have a low introductory interest rate. The thinking is that they will earn more money in the future, so when the rate increases, they will be able to afford the new monthly payment. However, ARM’s carry a lot of risks and even though interest rates have been at historic lows for years, they are starting to creep back up. What happens in rates increase, but your home value falls? You’d be screwed.
Younger buyers may want to consider a lower down payment loan – like an FHA loan or low down payment conventional loan – to reduce their initial out-of-pocket expense while locking in an interest rate.
30’s – Not thinking about the future
When home shopping, you must consider whether or not you plan to start a family in the future. Even single people should keep this in mind as life can change quickly. A sleek, modern 1-bedroom condo may make a great home for a single person, but in a few years, it may not make any sense at all. Think long term when buying a home.
40’s to 50’s – Overestimating your budget
Buyers in their 40’s and 50’s tend to have more money saved, which can lead to overestimating their budget. They can easily end up buying a house that they really cannot afford once you consider the monthly payments and that they typically last 30 years. Figuring out your budget is a key step for buyers of all ages, but especially those in this age group.
60’s and up – Falling in love with a vacation home
Once you get into your 60’s and above, retirement is here or coming soon. Many retirees go on vacation, fall in love with a place, and make plans to move. Relocating and buying a home is an expensive process, so be sure to familiarize yourself with the new place before buying, if you fall into this age group. Your vacation home can be your full-time home, but just be sure to factor in all of the costs, before making the move.