Did you know that moving to a new home is one of the biggest stressors we face in our lifetimes? If you’re in the process of moving, buying a home, or thinking of buying a home, you know how stressful and overwhelming the process can be.
When you buy a new home, there’s also the matter of making what is probably going to be the biggest purchase of your life. What if you buy the wrong house? Or get caught up in a bad deal?
With a little research and knowledge, you can hopefully avoid some of the most common home-buying errors. Read on to learn more about what to watch out for.
1. Falling in Love With the First House
It’s ok to love the first house you see, but don’t let that keep you from seeing other homes. If you really love that one, check out other homes which will reaffirm that the first house is the right house for you. It’s tempting to just go with the first one if you love it, but you shouldn’t settle.
2. Not Shopping for Rates
Most credit reporting agencies will consider credit pulls that happen in a quick timeframe as just one credit pull. This means you don’t have to be worried about multiple hard credit pulls impacting your credit report. For example, if you rate shop and have three different lenders pull your credit in one week to give you a rate estimate, the credit bureaus will only consider this one hard pull.
The lower your rate, the lower your monthly payment, and the lower your overall cost of the home will be. Just like you shouldn’t settle for the first house you see, don’t settle for the first rate you receive.
3. Not Planning for the Full Cost of Home Ownership
Your monthly mortgage payment may or may not include your taxes and insurance. If it doesn’t, you’ll have to pay your homeowner’s insurance and property taxes on your own. The cost depends on where you live, so you’ll need to factor that into your budget.
Just as you must consider the cost of insurance and taxes, you’ll also need to budget for home repairs. If you are used to rending and having a landlord who fixes anything that breaks, you might be in for a rude awakening when it becomes your responsibility to fix anything that needs it. Be sure to create a home repair fund.
If you’re considering one of these rehab homes for sale, for example, you’ll need to budget plenty of money for home repairs.
4. Not Getting a Mortgage Pre-Approval
Most real estate agents will not even consider an offer on a home from a buyer without a pre-approval. Not only is it smart to have this in a quick-moving real estate market, but you also need to know what the bank will lend you for the purchase of your home.
Before you begin looking at houses, get in touch with a lender to get a pre-approval. This letter doesn’t guarantee that you’ll get that amount, but it does state that you are pre-approved for a certain amount.
5. Buying More Than You Can Afford
Just because a bank approves you for a certain loan amount doesn’t mean you should spend that much. Don’t max out your budget and forget about things like taxes, insurance, and home repairs. You don’t want to be house poor and unable to do anything because you maxed out your home budget.
Avoid These Home-Buying Errors
You can avoid these home-buying errors by going into the process with a clear head and plenty of research ahead of time. Buying a home should be a well-thought-out process and not something you decide on a whim.
If you found these tips useful, be sure to check back often for more home buying resources.