Many people look forward to buying their first home. Owning a home typically means financial stability and, of course, a place to call your own. But while the experience can be exciting it can also be anxiety-inducing, too. After all, when you buy a home you are committing to a loan that will take 30 or more years to pay off. Of course, there are also many other risks that go along with it, too.
For that reason, then, you need to make sure you are making the right decision. Are you buying the right house for you and your family? Is it big enough to accommodate your family? What about the family you plan to have in the future? Can you afford it? Do you anticipate, perhaps, eventually moving to another home?
These are all important TSW Real Estate Group questions to ask, but you also need to consider these potential risks as well.
POTENTIAL RISK #1: Default
When you buy a home, this is the biggest risk you take. If you cannot make payments—for any reason—your bank will eventually send your mortgage into default. Sure, maybe they will let you slide once in a while—and you can always get your mortgage refinanced if you need to—but go too long without making a payment and you could find yourself not able to get credit in the future.
POTENTIAL RISK #2: Obsolescence
A lot of people buy a “starter home.” In fact, it is often recommended: when you are young and don’t have much money—or credit—you buy a small house and develop your credit history. In time, then, when you start to have a bigger family, you can move into a bigger house; or perhaps you need to relocate for a job.
This is not normally a problem but sometimes you live in a house that nobody wants to buy. Maybe you live in a quickly developing area and the house you bought is older. If nobody wants your home—it becomes “obsolete” in the market—you bear the risk, later, of not being able to sell it when you want to; or not being able to get a decent price for it.
POTENTIAL RISK #3: Disaster
Yes, you can get homeowner’s insurance, but that does not cover natural disasters. Your policy will cover fire but not flood, hurricane, or earthquake. If you live in an area prone to erratic storms, you may want to supplement your homeowner’s insurance just in case.