Want to avoid potential mishaps and home-buying Pitfalls? Heed this advice from realtor.com that’s based on the experiences of people who’ve gone through the process many times. Here, some tips on how to avoid the mistakes homebuyers make again and again.
1. Know your true priorities
Before you begin your home search, isolate your top criteria—whether that’s a certain number of bedrooms, proximity to work or school or a fireplace—so you won’t be easily sidetracked. Creating a list of top features or amenities increases efficiency.
2. Have plenty of patience
Purchasing a home is a huge investment, so don’t rush into it. It may take some time to find the right property, but your patience could be rewarded with a great find. For instance, if you’re having trouble finding the right home, you might consider looking at a distressed property that will need some work.
By arranging for contractor estimates before submitting an offer, you could possibly get a great deal on an overlooked property that requires mostly cosmetic work.
3. Don’t go house-blind
Consider the advice of your Realtor, lender and others who’ve done this many times before. Say, for example, you ignore your agent’s warnings about the expense and complication of purchasing an old farmhouse for your first home and move forward with the offer.
If an inspection uncovers many problems and repairs that are needed, you could end up backing out of the deal. While you will be able to recover your escrow funds, you can’t get back the thousands of dollars spent on the inspection, appraisal and other due-diligence tasks.
4. Don’t think of your loan approval amount as your budget
During the pre-approval process, your mortgage lender will let you know the loan amount you qualify for based on your credit score and other financial information. Often, this number translates into a monthly payment that is higher than what you can actually afford, along with all of your other monthly expenses.
Just because you qualify for a certain mortgage price doesn’t mean you should buy a home for that price. Purchasing a home with a payment that is too big for your monthly budget can leave you house poor, stressed and unable to afford maintenance. Instead, ask the lender to work backward to find what the budget can afford. This way, you can know the home fits in your budget, and you can find a home you can comfortably afford.
5. Don’t make a big purchase just before closing
Even if you’ve gone through the pre-approval process with a lender, your mortgage isn’t final until you’ve closed on the house. Don’t jeopardize your ability to get the mortgage by making large purchases or doing other things that can affect your credit score or borrowing ability.
A common mistake is that once a buyer is pre-qualified and has had an offer accepted by a seller, he or she will go out and purchase a car, apply for additional lines of credit, accrue more debt, miss payments or pay late on current obligations. Doing these things potentially could affect your credit score in a negative way, resulting in you not receiving final approval from your lender.