You’ve been renting for years, diligently saving your money to get that down payment on the house of your dreams. Now that you’re a little nearer to your goal, you may find yourself on housing websites, perusing the goods. Soon you will be out there scouting out neighborhoods and attending open houses. Before you sign your name on (many) dotted lines, read on. It could save you money, time, headaches, and heartaches. Here are 8 Common Mistakes Made by New Home Buyers:
1. Looking for a home before getting pre-approved
Plenty of first-time homebuyers make the mistake of searching for that perfect home before being pre-approved for a mortgage. If housing inventory is tight, and in many markets it is, a buyer stands a good chance of losing that property without a lender in place.
2. Spending more than you can afford
Get your budget in place before you head out to fall in love with homes that will stretch your budget beyond its limit. Buying a home is emotional enough, without yearning for something you cannot afford. As a new homebuyer, it’s essential to leave room in your budget for the unexpected expenses or financial difficulties you may face. New homeownership brings with it many expenses renters may not have experienced yet, such as property taxes, a multitude of insurances, utilities, etc.
3. Settling on the first lender you talk to
It’s okay to shop lenders and mortgage brokers. Experts suggest you talk to at least three lenders to help compare fees, terms, and rates. Consider your lender’s “responsiveness” to you, as this can make a difference in the entire lending process run more efficiently. The more you shop, the easier it is to make comparisons and determine what lender will work best for you.
4. Focusing on the house instead of the neighborhood
It’s much easier to upgrade your house than it is your neighborhood. You want to sink your roots into a community that you appreciate and with which you share values. Your choice for a neighborhood is worthy of a little research. Are home values on the rise or the decline? Is there an abundance of undeveloped land nearby? If so, are there proposed plans in place for its development? These factors may play a direct role in your choice of neighborhood you choose for your investment. If you’re a parent or plan to be, the quality of the school district may become an important factor in your decision.
5. Not getting a Home Inspection before you buy
Before closing that sale, you should know what sort of condition the home is really in. Set up a thorough home inspection of the property (your lender may require it) to be sure you are not buying a classic “money pit” – destined to bring you heartache with abundant repair costs.
6. Not using an Agent
As a first time homebuyer, you may not be in the best bargaining position if you begin dealing with the seller’s agent before you have one of your own. You should have a real estate agent or broker in place before you start seriously shopping for homes at open houses. Real estate professionals have valuable experience that goes beyond what you can find online. They know the ins and outs of the process, the neighborhoods, and might even have access to homes before they hit the market.
7. Lacking vision
Don’t let ugly wallpaper or dated cabinets deter you from considering a house. Remember to concentrate on the broader issues of whether the home has what you’re looking for. If the home otherwise offers other features on your list, like location and size, try and see past its minor flaws that can easily be repaired, replaced, or repainted.
8. Offering too much
You’ve been searching for weeks and finally found the perfect house. Now it’s time to put in your offer. Real estate markets are highly competitive these days, and once you’ve found the home of your dreams, you may get involved in a “bidding war.” Many home buyers will try to circumvent a bidding war by offering a higher price than the asking price. Ivestopedia.com advises that “if the house doesn’t appraise at or above the amount of your offer, the bank won’t give you the loan unless the seller reduces the price or you pay cash for the difference. If this happens, the shortfall on your bid as opposed to your mortgage will have to be paid out of pocket.” Also, if you want to sell later, market conditions may have remained stagnant or dropped, in which case you may find yourself upside down on the mortgage.
As a new home buyer, there is no shortage of advice at your disposal written by experts – and also lots of information from first-time homebuyers who have learned the hard way. Now that you know the 8 Common Mistakes Made by New Home Buyers use these tips as a guideline. You can go into your new house search with the confidence to get you moving!