Buying a house is a major milestone, and is one that requires planning and patience. Since this is most likely the biggest purchase you will ever make, it’s understandable that it can be stressful. We have compiled a list of common home buying mistakes to avoid in order to ease your mind and help you navigate the process of buying a home.
Mistake # 1 – Looking for a home without a pre-approval
Obtaining a pre-approval from a qualified mortgage lender is the first step towards home ownership. Some buyers are eager to begin their search, and do so without getting their pre-approval first. This is a mistake because most real estate agents will not accept offers from buyers that are not pre-approved. Save yourself the hassle and get pre-approved first.
Often, buyers fall in love with a house and what is on the inside, but fail to do proper research of the neighborhood before buying. It is wise to research crime rates, traffic, schools, and noise levels. Ideally, buyers should visit the home at different times of the day before buying to get a better picture of what it will be like to live in the neighborhood. Remember, you can change carpet, paint, and décor – but you can’t change location.
Mistake # 3 – Maxing out the budget
Just because the lender pre-approves you for an amount, doesn’t mean you need to spend the entire amount. It is best to be conservative with your home purchase in order to be prepared for other expenses, such as taxes, homeowner associations, and insurance. Not to mention, having all of your money going towards your house payment is not ideal. Leave yourself enough cushion to do the things you love doing, save money, and plan for retirement.
Mistake # 4 – Skipping the home inspection
Since home inspections are not required, many buyers choose to proceed without them in their urgency to become homeowners. It is extremely risky to buy a home without a home inspection, because even newer homes have issues that aren’t always visible to the naked eye. Taking the time to have a home inspection allows the buyer to be aware of any issues with the home that need to be fixed prior to closing.
Mistake # 5 – Buying big-ticket items before closing
Buyers often forget that their financial status is under a microscope prior to closing on their new home and wind up buying big-ticket items like furniture or appliances. Spending large amounts of money or taking on new credit can jeopardize the approval of your loan because it changes your debt-to-income (DTI) ratio. Wait until after closing to make major purchases.
Many buyers are in such a rush to get through the closing process that they do not read the documents they are signing. Panic occurs when the first mortgage, insurance or tax bill is due because they did not read the documents at closing and are not prepared. Electing to have an attorney present at closing is wise to ensure each document is explained and fully understood before signing.
While buying a home can be a stressful process, it should also be an exciting time. Learning from other people’s mistakes can help make the home buying process less stressful and more enjoyable. Enlisting the help of seasoned mortgage professionals can alleviate the stress and allow you the ability to focus on this new chapter of your life.