Buying a home is a detailed process that requires you to be tuned in to what could go wrong. Everything from presenting an offer to living in a house has hitches that can be smoothed away by a little awareness. Read on to learn how to avoid the following five costly mistakes home buyers make.
1. Not getting pre-approved before house hunting
Getting approved for a loan is an important step in buying a home. Without a loan, there is no home. Pre-approval will give you an understanding of your finances and how much financial institutions are willing to lend you. To make sure you are getting the best pre-approval rates, shop around. Contact a couple banks, a few national banks, and one or two mortgage brokers before deciding on one. Through the pre-approval process you will learn your credit score and how it will affect which interest rates you qualify for. Knowledge is power, so knowing where you stand financially before house hunting will help you focus your efforts only on homes you can afford.
2. Falling for love at first sight
Naturally, when you are looking for a home you are looking for something that feels like home it’s easy to get swept off your feet by a house. But, that’s no reason to buy. You are shopping for a location as well as for property. Don’t let your emotional attachment to a home overpower your reasoning capabilities. Real estate purchases are investments and someday you will wish you had thought about how far your home is from the freeway. Find out everything you can about the house itself and its location. Are there any issues the house struggles with? How are the schools? Is there a grocery store nearby? Loving a house is spontaneous, choosing the right house for you, your family, and your future requires careful thinking and thorough knowledge.
3. Buying a house you can’t afford
Buying a home and keeping a home are very different. When you decide on a house to buy make sure you will be able to make every mortgage payment, which should be less than 28% of your gross monthly income. Even if the house is perfect and it’s just a little more money, seriously consider the impact a high mortgage payment will have on your financial life.When you are in the shopping stage of home-owning, it’s hard to remember that owning a home costs more than just the mortgage payment. Utilities, repairs, maintenance all have monthly or recurring costs. Buy a home that will work with your finances if you want to have a long, healthy relationship with homeownership. Here’s how to calculate how much home you can afford.
4. Forgoing a home inspection
Opting out of a home inspection may seem like a great, money-saving idea at the time but the consequences may be more than you bargained for. Without a professional home inspection, the home you buy could have major issues that won’t be apparent until after move in. Maybe it has mold or newly developed foundation issues. Neither is visible, but a professional home inspector will find them. Trusting that the seller has disclosed every issue is dangerous.For one, the seller may not know about newly developed issues in the house. For another, they may have not told you everything there is to know. The only way to be sure is to include a professional home inspection in your Purchase Agreement, and to make the agreement contingent on your approval of the results. Buying a home is an investment so it’s important to make sure you aren’t investing your money into a property that is riddled with problems.
5. Not working with a buyers agent
Going into the real estate market without representation is going to put you in a vulnerable position. Although the seller’s agent will help you navigate through the home buying process in lieu of your own agent, at the end of the day the listing agent works for the seller. A good buyer’s agent will go a long way in making sure your interests are protected throughout the home buying process. Your agent will help you research neighborhoods and schools, verify every document and statement from the seller and the listing agent, perform a comparative market analysis (CMA)on the home you choose, and review every inspection report during escrow.Finding the right buyer’s agent for you and your home is the most important step in finding the perfect house for the perfect price. Contact a First Team office near you to find a buyer’s agent that will represent your best interests. Preparation and forethought are key to success in your home buying endeavor Make sure to avoid these five mistakes as you search for your home. Happy hunting!
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