Common Mistakes Homebuyers Make
The thought of owning a home can be exciting and frightening at the same time. You finally have your own place and you don’t have to worry about the landlord. For a lot of first-time homebuyers, there are some things that can be overlooked which will be costly in the long-run. It is important to be aware of the pitfalls so that you don’t make the same mistakes. Here are some of the mistakes you should be avoiding when buying a home.
Purchasing a Home When in Debt
You probably have an idea of what happens when you start piling up debt. It is like running a marathon while carrying deadlifts on either side. You’re not likely to go far. As much as homeownership is an exciting proposition, it won’t be as fun when you’re in debt. Try to clear off all debts before you think about getting a mortgage. Having debt will weigh down your monthly budget. You will find yourself living from hand to mouth. This is a dangerous situation, especially if you have kids.
Buying a House You Can’t Afford
This is another mistake that a lot of people make. Getting the mortgage is easy but you will only realize you’ve made a costly mistake when you start paying for the house. It is crucial to know how much you can afford before taking a loan. For starters, you need to have saved for the down payment which is usually 20% of the home value. You should also set aside an emergency fund because there will be other costs associated with homeownership which won’t be that obvious when buying.
For a down payment, any amount that is below 10% is just too low, although there are some lenders that are willing to offer single-digit options. When the down payment is low, you’re likely to pay more interest and this will take longer to clear the loan. Make sure you’re saving as much as possible for the down payment so that you’re not straining to finance the house.
Forgetting About Closing Costs
As we’ve already mentioned, there are other costs associated with buying a home. Closing costs are set at around 4% of the value of the home. There are also taxes and maintenance costs to be mindful of. You might have to do a couple of essential repairs before the home becomes livable. There are also moving expenses to think about which could be as much as $1,000 depending on the location.
Not Getting Preapproved
Try to imagine a situation where you’ve found the perfect home and it is within your budget. Since your search is over, you make an offer but you find out that the seller has gone with another buyer. If you were not buying the house in cash, the seller probably went with someone that was preapproved. The preapproval letter shows the seller that you’re a serious buyer and you’re not checking out houses just for the sake of it. Getting a preapproved letter will give you an unfair advantage because the seller knows you will definitely make an offer if you like the house, as you have the financial backing which is the most important thing.
Cosigning the Mortgage
This is another big mistake that a lot of people make which could end up hurting them in the long run. If you can’t buy the home without a cosigner, you’re better off postponing the purchase to a later date when you’re in good financial standing.
Not Researching the Real Estate Agent
A good real estate agent will ensure that you’re getting a good house that is within your budget. Searching for a house can be a challenging endeavor. You might get overwhelmed with the options available, which will cloud the decision-making process. You can work with Universal Buyers Agents to ensure that you’re getting the property that you’re looking for. There are some buyers who will skip using a real estate agent altogether, thinking that they can manage it on their own. According to statistics, nearly 90% of people who purchased a home in the last year used a real estate agent.
Focusing on Style
A house is more than the style but more about the structure. It will be silly to pass on a near-perfect house just because you don’t like the paint job. You should be focusing on things that are easy to fix. The paint job can always be redone. The problem will come when there is an issue with the structural integrity of the house.