The process of buying a home can be intimidating for those who have never gone through it. Even experienced buyers make occasional mistakes that end up costing them time and money down the road. First-time buyers would do well to familiarize themselves with these blunders. This way, they’ll know what to expect when they start shopping for their new homes.
With this in mind, we’ll take a detailed look at five homebuying mistakes that can saddle you with a poor investment. Avoid the following to help ensure the home you purchase meets your expectations.
1 – Only Considering The Price
This is a mistake commonly made by those who have never bought a house. They see the home of their dreams, and become excited about the prospect of living in it. They begin to quickly tally the monthly mortgage payments to make sure they can comfortably make them.
The problem is, there are many other expenses to consider besides the mortgage. For example, you’ll need to pay property taxes; you’ll need to set funds aside for major repairs; and you’ll want to invest in a homeowners insurance policy that protects you from potential loss. If you neglect to consider these “extra” costs, you might purchase a property that you are unable to afford.
2 – Neglecting To Have An Inspection Performed
If this is your first time buying a house, you might easily forget to hire a professional inspector. But this is a crucial step to avoiding an expensive nightmare. If you buy a home with a bad roof, poor drainage, wiring problems, or an HVAC unit that is on the verge of failing, expect to pay thousands of dollars to have the problem fixed. A home inspection will reveal these and other issues that should be addressed prior to finalizing the deal.
3 – Failing To Secure A Mortgage Loan
This happens frequently. The buyer will begin looking at homes for sale without having secured financing for a purchase. He or she may become excited by a particular property, and submit a bid. Even if you believe you can afford the mortgage payments, you still need to find a lender who is willing to loan the money to you. Therein, lies the problem.
Lenders often refuse to extend mortgage loans based on the would-be borrower’s sparse or poor credit, or due to the person’s financial circumstances. If you submit a bid for a property without having been approved for a loan, you will have wasted everybody’s time.
4 – Changing Your Financial Circumstances
Place yourself in the lender’s position. You have agreed to extend a mortgage loan to a borrower based on his current financial profile (i.e. income, outstanding debt, credit history, etc.). Suddenly, his profile changes prior to closing on the home he is buying. Perhaps he buys a new car and finances the purchase, thereby increasing his outstanding debt. There’s a good chance you’ll rescind the loan.
In the same way, be cautious about changing your financial situation before you close on your new home. Otherwise, you may discover the loan for which you were previously approved has been revoked.
5 – Not Hiring A Real Estate Agent
Bookstore shelves are packed with books explaining how to purchase a home without the help of a real estate agent. The authors make the case that doing so will allow you to avoid paying the agent’s commission. Here, the problem is that a real estate agent can add immense value to a homebuyer’s search for the perfect property. This person can offer keen insight into local market conditions, and uncover prices of comparable homes in the neighborhood.
Can you avoid paying the agent’s commission by going through the homebuying process on your own? Yes. But you may end up paying far more as a result.
When you’re ready to begin looking at homes for sale, keep the above blunders in mind. They will guide you toward purchasing a house that meets your expectations without causing a financial headache down the road.
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