Shopping for a new home may be thrilling, and it’s easy to fall in love with the first property you see. However, a little patience will go a long way in making your home purchase a refuge rather than a pain. Instead of learning what to look for when purchasing a home, you’ll want to familiarize yourself with these common mistakes with choosing homes.
Read on for our full breakdown of the eight key mistakes you’ll want to avoid so that you can canvass through your options for homes with peace of mind.
1. Mistakes With Choosing Homes 101: Following Your Heart
What is the most common mistake with choosing homes that you can make? That is putting the breaks on brain function, and allowing your heart to lead you.
Before you start looking for a house, make a list of your deal-breakers.
Do you need high-quality school nearby? What about a neighborhood food store?
What is the minimum number of bedrooms and bathrooms? Buying a house frequently necessitates compromise, so don’t purchase a property just because your heart was drawn to it when you stepped across the threshold.
Make your choice based on how well the house meets your requirements, the home’s quality, and the neighborhood’s appeal.
2. Not Knowing the Full Costs of Homeownership
You’re undoubtedly used to the monthly cost of renting as a first-time homebuyer, which typically includes your rent payment, certain utilities, and your internet and cable bills.
As a homeowner, you’ll be liable for extra monthly expenses that your landlord may have paid. Water, sewage, trash expenses, monthly HOA fees , and lawn care costs will need to be factored into true home costs each month.
In addition, you’ll be liable for property taxes and property insurance. Don’t forget about the expense of upkeep. It’s suggested that you put aside 1 – 3% of the home’s purchase price each year for repairs and upkeep.
3. Thinking You Won’t Qualify
Many renters believe they won’t be able to purchase a home because they don’t have enough money to put down a 20% deposit. However, you may be shocked at what type of home you could purchase depending on the money you pay in rent each month.
To get a better idea of what you need — and how much you have — try putting some figures into an affordability calculator. You may also speak with a lender to see what you could be eligible for.
While a 20% down payment is desirable, you don’t always need that much to purchase a house. There are financing programs designed specifically for first-time home purchasers, such as the FHA loan, which requires as little as a 3.5 percent down payment.
Some traditional loans allow for as little as a 3% down payment. Furthermore, certain loans, like VA loans for veterans and military personnel and USDA loans for purchasers in rural regions, may not need any down payment.
4. Waiting to the Last Moment to Get Pre-Qualified
Many first-time buyers wait until they’ve found a house they want before approaching a lender, but there are many advantages to being pre-qualified early.
Pre-qualification may help you browse within your budget, move quickly when you discover a home you want to buy, and detect — and fix — any mistakes on your credit record before they create an issue with your loan.
This may save you hundreds of dollars in the long run since a credit report mistake could decrease your credit score, resulting in a higher interest rate.
5. Going With One Lender
Many house buyers choose a loan based on a referral from a friend, family member, or real estate agent, and they don’t shop around. However, this does not ensure that you will get the best rate or that you will be matched with a lender that is familiar with loans in your circumstances.
Despite the fact that it is not necessary, most house buyers get a loan from the lender that pre-approved them. So, while you’re still in the pre-approval stage, it’s a good idea to conduct some research with lenders.
Zillow offers two tools that may assist you in comparing rates and programs. You may contact a local lender who has dealt with loans similar to yours, or you can receive free, confidential mortgage rate estimates from hundreds of lenders.
6. Spending Your Whole Budget
A lender will usually mention the maximum amount they will lend you in a pre-approval or pre-qualification letter. However, just because a lender will lend you a specific amount does not imply you should utilize all of it.
The 28/36 rule states that a homeowner must spend no more than 28 percent of their monthly gross income on housing costs and no more than 36 percent on total debt.
However, since purchasing a house entails substantial upfront expenditures, such as a down payment and closing costs, you’ll want to be sure you have enough money set aside for emergencies and other unplanned expenses once you close on your new home.
Compare the rental market to the costs of home ownership in your area and see what is the best fit for you and your budget. For now, you’ll want to see these rentals before you finalize your real estate research.
7. Ignoring Any Payment Assistance Programs
Saving for a down payment is often regarded as the most difficult aspect of becoming a homeowner for first-time buyers. But did you know that the United States has hundreds of down payment help programs?
These schemes usually provide “soft” second or third loans or grants with 0% interest rates and no payment penalties. Inquire with your real estate agent or lender to see if there are any programs available in your region that you may be eligible for.
Another thing to consider would be receiving a gift from a loved one. Different situations require different solutions, and there are various ways to handle a gift as a possible way to get you into a home.
8. Neglecting an Inspection
Before you buy a house, get it inspected by an expert. It’s all too simple to ignore flaws in your house that can cost you money in the long run.
An expert will know what to look for and can help you avoid making a costly mistake.
Ready to Explore the Different Apartments and Houses?
We know how overwhelming it can be to find the perfect home for your family, especially if this is your first time buying one.
We hope that our guide has shed some light on the eight mistakes with choosing homes that you’ll need to keep an eye on so that you won’t repeat the same mistakes of your predecessors.
And, if you liked our article, then you’ll love checking out our additional tips and strategies. All will be available in our real estate section.