Avoiding Common Home Buying Pitfalls
Keys hanging from a door lockBuying a home can be both exciting and terrifying, so it's no surprise that many find the process overwhelming, and find themselves unprepared for the details and work involved. If you're a first-time home buyer or are unfamiliar with the process, mistakes can happen, and when it comes to purchasing a home, there isn't any room to learn as you go. Mistakes can cost thousands of dollars or even the chance at buying your dream home. With that in mind, here are a few things to consider when buying a home:
Think About The Financial Aspects
Common sense tells us that home ownership can be expensive, but it is worth taking the time to account for the costs involved in the houses you're considering. First is the upfront costs - the down payment and closing costs - and although you may be able to make a smaller down payment, that will eventually translate into a higher monthly payment, and, potentially, higher home owner's insurance. Then, there are moving costs, property taxes, and home insurance, and, potentially, the costs of renovations, alterations, repairs, and maintenance... it all adds up.
Getting approved for a loan isn't the end of the financial process: it's the beginning. Credit lenders check your credit when you apply for a loan, and again right before closing, and if there is a significant change to your credit score in between those times, it can put your home loan at risk. Prospective home buyers should put any shopping off until after closing, and spend that time paying down credit balances and other debts.
Finally, there is the mortgage itself. Making the mistake of looking at homes before you've been approved for a loan amount can not only lead to disappointment, but in getting a house you ultimately cannot afford. Considering how much you can really afford each month prevents you from overextending yourself and risking foreclosure and losing everything you've put into your new home. Before you even start looking at houses, calculate your income to debt ratio and your other obligations. Factor in saving for a down payment and figure how long it will take you save that amount of money. Getting your finances in order is the first step to getting the loan you want for the house you need.
Shop For The Right Loan
Eager and excited home buyers often start by looking at homes, trying to find the perfect fit, often leaving the loan process until later. Some even choose to go with the first lender that pre-qualifies or pre-approves them. And while they may be offering a good loan, it may not be the best loan or deal for you and your needs. A home mortgage is a long-term commitment, and usually the biggest expense you'll have for years to come. It pays to shop around for the best offer, particularly when it is your first mortgage. Asking others or a professional for advice is usually the best course of action.
Don't Ignore Problems
It's easy to fall in love with a particular house, the neighborhood, or its location, but that may cause you to overlook some fairly serious problems. You may overlook serious problems or think that major repairs might have easy fixes or that you can live with the problems for a while. Most homes are going to have some issues, but problems with the foundation, roof, structure, heating and cooling systems, plumbing, and electrical are almost always very costly repairs and should be red flags for additional consideration. Getting a thorough home inspection done is part of the closing process, but you can usually see major problems on your own. Not every issue is a deal breaker, and if it is your perfect home, you may be willing to tackle the repairs and renovations. But it is still very important that you identify every problem, not only so that you can determine what needs repaired and what it will cost, but also so that you can perhaps negotiate a better sales price based on repair costs.
Ask An Experienced Real Estate Attorney For Advice
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