5 Homebuying Mistakes and How to Avoid Them
Mistake #1: Not getting your finances in order.
Understanding your financial situation is imperative if you want to buy a home. Without knowing your expenses, you can’t determine how much you can afford, and may end up with a debt you can’t handle. Before you even consult a mortgage lender or real estate agent, take a thorough look at your finances. How much do you earn each month, and how much of that goes toward bills, car payments, etc.? Do you anticipate any additional expenses in the near future? If you know you’ll have to buy a new car, or your child is going off to college, this may not be the best time to take on additional debt. Also, obtain a copy of your credit report. Lenders use this to determine if you qualify for a mortgage, and if so, how much they’re willing to lend you. If your report is inaccurate, you may not receive as good a deal as you could.
Mistake #2: Using a mortgage broker instead of a mortgage lender.
Brokers and lenders are not the same thing, but a lot of people don’t know that. In fact, they operate very differently, and not knowing the difference between them can cost you. A mortgage lender (also called a mortgage banker) provides funding for the home loan themselves, while a broker contacts lenders to obtain quotes for clients. It may sound easy to have a broker do the legwork for you, but they won’t get you any better deal than you can get by contacting lenders directly. And, brokers charge you for their services, so you actually spend more. A better strategy is contacting several lenders for estimates, and choosing the one who offers the best deal.
Mistake #3: Not having a home inspection.
The home may seem immaculate, but you don’t know what problems may lurk just underneath the surface unless you have the home inspected by a professional. Termites, faulty wiring, water damage – these are just a few of the problems that can remain unseen, yet still be dangerous for homeowners. And once you buy the home, the expense for fixing those problems is yours. To make sure you don’t buy a “money pit,” hire a professional home inspector who knows how to spot problems
Mistake #4: Not considering the neighborhood.
A large backyard. Ceramic tile. Pristine hardwood floors. Everything about the house is perfect – or is it? If you’re not examining the neighborhood as closely as you’re examining the house, your dream home may turn into your worst nightmare. You may not know that your next door neighbor throws loud parties every weekend, or has a dog that barks all night. Or that the serene street becomes a miniature speedway when a bar on the corner closes and the patrons all leave at the same time. That’s where a little research can help. Visit the neighborhood at various times – early in the morning, late at night, on weekends. This gives you a more complete picture of the atmosphere, and alerts you to problems that might deter you from living there. Also, look up crime statistics for the area, as well as any environmental factors, like if the street is prone to flooding.
Mistake #5: Not making sure you’re getting a good price.
The price may sound reasonable, but without knowing what other homes in the area are selling for, you may pay more than you have to. Before you even start house hunting, look into prices in your local market. Are things slower than usual? Are prices falling? Or is your city so popular that housing is in demand, causing rates to escalate? Determine these things, and once you find a home you’re interested in, have your real estate agent perform a comparative market analysis. This analysis tells you how much other homes in that neighborhood have sold for, including the highest, lowest, and average prices in the area. Most real estate agents will prepare this report for no charge.
In Conclusion
While buying a home may sound scary, it’s worth it if you’ve done the necessary preparation. If you’ve researched exactly what you need in a mortgage and in a home, you may find a house you’ll be happy to call yours for years to come.
