There are a multitude of things prospective homeowners should be aware of. Here we break down some of the mistakes to avoid when purchasing a home.
Renting instead of Buying. Plain and simple, renting an apartment or a house will not build equity. Your payments are not providing any financial benefit to you. Once you’re ready for homeownership and you’re financially prepared, don’t procrastinate. Even if you eventually want a larger or newer home, buying a house now might be a sound financial investment. If you can find a home at a decent price, the equity you build up has the potential to provide a down payment on a home you can plan your future in.
Watching Interest Rates. While everyone wants a low interest rate, waiting for a lower rate can certainly mean a higher price overall. Finding a home you love, that you can picture yourself in for years to come, can be an exhausting task. Now imagine this scenario: You have researched the neighborhoods in the area you want to live in, checked out the schools and transportation options, found exactly where you want to live, only to find you waited too long and the housing market has changed, leading to higher asking prices. It’s better to buy now, even if rates are high, since you always have the option to refinance later.
Waiting For A Preapproval. The preapproval is important for a couple of reasons. The preapproval will tell you how much you qualify for, leading you in the right direction when looking at homes. You don’t want to fall in love with a home, then find out you aren’t approved for the asking price. Remember there are expenses aside from the cost of the home to prepare for, such as insurance and closing costs. Also, having a preapproval when you find a house you’re interested in puts you ahead of buyers without a preapproval. It tells the seller you are prepared to move forward, and it saves time and anxiety. Remember, you are most likely not the only buyer putting an offer down on that house! Knowing what you can afford and what you can offer is critical.
Neglecting to Educate Yourself on Various Types of Loans and Down payments. When speaking with lenders, determine what types of loans you qualify for and options for your down payment. Depending on your situation, you might qualify for a VA or FHA loan. Or perhaps a Conventional/Fixed Rate Mortgage is better for you. The down payment regulations and penalties differ with each, so it is important to understand what your options are before determining what you think your out of pocket expenses will be.
Choosing the First Real Estate Agent You Find. One of the most important things you can do when you decide to purchase a home is find a Real Estate agent you can trust and work with. A good agent will walk you through the entire process. They’ll be on the lookout for exactly the type of house you are looking for and in the area you want to live in, negotiate on your behalf, assist in scheduling your inspections, submit counter offers if necessary, and prepare you for your closing.
Foregoing the Inspection. As a buyer, it is important to make sure you insist on a house inspection before purchasing. Not only do most lenders require the inspection, its important in order to determine if there are any issues with the home you need to worry about. These could include anything from structural issues to electrical problems, presence of mold, or leaking roof. If the inspector finds issues with the home, your agent will renegotiate on your behalf. Depending on the problem, the seller might decide to fix the issue before selling or lower the asking price.
Bypassing Homes Because They Do not Have Everything on Your Wish List. When looking for a new home, try to keep an open mind. While you might not want to make concessions on the big things, such as number of bedrooms and bathrooms, you might want to consider making concessions on some of the smaller things. Perhaps the kitchen is not as up to date as you wanted, or the living room has outdated wallpaper. Overlooking these things and being willing to make updates after living in the house might save you time and money.
The house buying process can be a daunting, time consuming and stressful endeavor, no matter how you look at it. However, if you avoid these mistakes and work with the right agent and lender, you can certainly make the process easier on yourself and end up a new homeowner before you know it!