8 Common Mistakes to Avoid When Buying A Home
Whether you’re buying your first home or your third home, there are many mistakes you can make throughout the process. Buying a home involves many steps and lots of decision-making, so it’s easy (and common!) to take a misstep along the way.
No need to worry though! Here is a list of 8 common mistakes homebuyers make, but you can easily avoid them! Keep them in mind throughout your own home buying experience.
1. Starting your home search before finding out your affordability.
An important first step to take before buying a home is figuring out your affordability. You can contact a mortgage company to help you with this step.
It’s helpful to know your affordability before starting the search process so you don’t overestimate what type of home you can afford. Imagine having your heart set on a home just to find out it’s way above your budget! Finding out your affordability and setting reasonable expectations from the start will save you from disappointment in the long run.
2. Not getting pre-approved.
This mistakes goes hand-in-hand with mistake #1. Pre-approval is another important step to take care of at the start of your home search process. While this step confirms how much money the bank is willing to loan you, it also shows to home sellers that you are a serious buyer. The market is especially competitive for buyers right now, and a pre-approval letter will make you a more qualified buyer than competitors who may not have gotten pre-approval.
3. Underestimating the costs of buying a house.
There are many hidden costs associated with buying a home that many people don’t realize. It’s important to take these costs into account when figuring out your budget as they may affect what your budget limit is. Some of these costs include mortgage insurance, closing costs (often 3-4% of the price of the house that you’ll have to pay out-of-pocket on top of the down payment), title insurance, home inspection, appraisal fees, and moving expenses.
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4. Not hiring an agent.
Agents offer many benefits, including access to the MLS (Multiple Listing Service), expertise in what type of house you can afford and what’s available in your target area, negotiation help, and much more. Plus, an agent’s commission is typically covered by the seller, so you can enjoy all of the benefits at no cost to you!
5. Forgoing the inspection.
Waiving the home inspection contingency may be tempting, but don’t do it! Home inspections are a worthy investment when committing to a new home. Inspectors may find small issues that you can ask the sellers to fix or big issues that may change your mind on the deal. It’s important to pay an inspector to find these issues upfront to potentially save you extra time and money down the road.
For example, perhaps your potential new home needs a roof replacement as soon as possible. By finding this during the deal process through a home inspection, you can ask the seller to lower their price, fix the roof themselves, or walk away from the deal altogether.
6. Emptying your savings for the down payment.
A good rule of thumb is to have three to six months’ worth of expenses saved after making your down payment and paying other costs. This allows you to make any necessary repairs that may come up and to have a decent emergency fund.
7. Applying for credit before the sale is final.
Taking on new credit before the closing process is over is a huge no-no. Your mortgage officer will be monitoring your credit score from the start of the closing process until the deal is completed. By taking on new debt, you risk your mortgage approval and could even lose out on the deal.
8. Ignoring the neighborhood.
While you may be willing to sacrifice the location for the perfect home, don’t sacrifice too much. Remember that you can always make updates to your home, but you won’t be able to change the neighborhood. It’s important to consider the neighborhood’s crime statistics, school district, any development plans in the works, local traffic, etc. Some of these may be a deal breaker for you!