Buying a home is one of the biggest purchases of your life and you want to be cautious that you don’t make any mistakes that you’ll regret later on. Here are the top five most common mistakes made when buying a home, along with tips on how to prevent yourself from doing them or how to recover if you have already made them.
#1: Not Getting Pre-Approved & Understanding Actual Costs of Owning a home
The biggest mistake made by homebuyers and is the first thing you should do if you plan on buying a new home! As a first time home buyer, you might think that as long as you can afford the mortgage payments, you can afford that home. But this is simply not true. A mortgage payment is just one of many home ownership costs. Property taxes and homeowner’s insurance should factor into your cost equation. Maintenance and repairs are also something to consider because your home will definitely need repairs and upkeep regardless of how new it is.
Several of these costs can sometimes be rolled into your mortgage payment. But it is important to consider all of these costs in addition to the mortgage payment so you can decide how much home you can actually afford to buy.
How to Prevent: Get pre-approved! By getting pre-approved, you’ll be able to search for homes that are affordable for you, while also putting you in a strong negotiation position when you make an offer. Always remember to compare mortgage rates. There are many avenues you can take from banks to mortgage brokers to get the best possible rate.
#2: Not Using a Qualified Agent
Qualified agents can help a homeowner buy a home in two ways. First, they can help you identify a suitable property that is well priced for the market. Second, they can help you quality for a mortgage by organizing and presenting your finances in a way that appeals to lenders. As a result, finding a good agent is an important step. A good agent will listen to your needs, spend time with you, and will look out for your best interest. They will have experience and be knowledgeable about the market.
How to Recover: It’s never too late to get an agent, even if you’re already at contract as they can help with all the legal and negotiation aspects.
#3: Not Getting a Thorough Inspection
Getting a thorough inspection is the only way you’ll know you have real knowledge about the house. Getting a home inspection is an component of buying a new home, but many inexperienced home buyers simply take the seller’s word that there is nothing wrong with the house. To avoid this mistake and to save yourself from huge problems in the near future, hire an independent home inspector. These inspections often only cost a few hundred dollars but they can save a buyer thousands of dollars – or even in rare cases hundreds of thousands of dollars - if they find something major that needs to be repaired. Most home sales are based on a contingency of the results of the home inspection so you can either opt out of the purchase or ask the seller to make the repairs if you aren’t comfortable with the results of the inspection. Often, home inspections pay for themselves. Sellers will often reduce the purchase price as compensation for problems discovered during an inspection.
How to Prevent: Hire a licensed home inspector. They take the emotion out of inspecting a home and give you a real critique about the home you’re thinking to purchase.
#4: Focusing on Wants Not Needs
This mistake is usually made by first-time homebuyers but can happen to even the most experienced homeowner.
How to Prevent: Make a list of must-haves and refer to it when you’re house hunting. Make sure it is a list of needs not wants.
How to Recover: If you’re in negotiations and realize you made this mistake, try using provisions of contract to either get out of the deal or fix the issues before you close.
#5: Thinking that buying a foreclosure is always going to be a great deal.
Buying a foreclosed home at a great bargain is often more difficult than it seems. Usually, buyers experienced with foreclosures are the ones able to get the best deals. A first-time homebuyer stands at a real disadvantage. Typically, a foreclosed home has been vacant for several months before it is put on the market. Leaving a house empty for an extended period of time is a recipe for disrepair. Experienced buyers know this and know what to look for. They also know how much to estimate repairs will cost. First time homebuyers have limited knowledge in this area. If you want to avoid making a major financial mistake and still purchase a foreclosure, speak to someone knowledgeable with foreclosures and get an idea of common problems. Then estimate the cost to make these repairs and decide if it’s still a good financial move.
Being aware of some of these typical mistakes can make a huge difference in your buying experience.