Purchasing a home is usually a dream come true for many people. It is exciting and fulfilling but could be a regret if done wrong.
Typically, financial advisors will tell you homes are good investments; this is true. But if you fail to avoid certain mistakes, it might be your worst financial decision.
Also, some avoidable mistakes can make the home less habitable or uncomfortable for you and your family.
Here are some of the mistakes usually made by first-time home buyers and how to avoid them.
Buying a home based on listing photos
Online listings are one the best place to start your home search. More than ever, homeowners are now using the internet to market their homes, thus offering you more than enough prospective properties to check out.
One mistake you should, however, avoid as a new homebuyer is making payment for a home after only viewing some pictures online.
The listings are meant to serve one sole purpose, to inform you that the home is available for sale. Whenever you see a property you like online, contact the seller to confirm if it is still available.
There have been instances homes are sold, yet their pictures are still listed. Once you confirm the property is still available, schedule a visit to check it out.
Also, examine the neighborhood if it is a place you would be comfortable staying.
Purchasing a home with your maximum loan amount
Lenders are usually willing to lend you money, provided you have a good credit score. You may be tempted to take the maximum loan amount available, but this might be a mistake.
Do not purchase a home that is more than you can afford. Check your ability to repay. It is best to take a loan you could repay in a few months or years instead of another that would take long years to repay without forgetting it comes with interest.
An easy way to decide is by calculating your gross annual income and only buying a home that is at most 2.5 times the amount.
Homes require maintenance and repairs. These are among the expenses you will surely incur upon the ownership of the home.For instance, you may later discover the need for USA Overhead Racks in your garage to create more space.
You want to make sure you have enough money to handle all of these.
Not shopping around for lenders
So you have seen a mortgage company’s advert for many years, and they appear to be a fantastic choice. You are not alone, this happens to everybody, but you will agree that the fact that a company spends most on an advert does not make them the best in the market.
Avoid getting a mortgage from the first and only lender you approach. Check out different financial institutions, at least three, to compare the best for your budget and purpose.
Since rates change regularly, to avoid biased assessment, try to get their quotes same day to compare. Things to evaluate include:
- Lender fees
- Loan terms
- Customer service
- Interest rates
Searching for a home without a mortgage pre-approval
Except you are funding the home purchase directly from your pocket, do not start searching until you get a mortgage pre-approval.
A mortgage pre-approval confirms that a loan officer has examined your finances based on debts, credit history and income to determine how much you can borrow.
It is a competitive market, and sellers are more willing to talk to potential buyers they are sure would make payment within a short period after an agreement is reached.
Getting a mortgage pre-approval gives you an edge. Doing this will prevent missing the opportunity if a home of your choice is listed. It could have been sold before you return from getting a mortgage pre-approval if you do not already possess one.
Note that the pre-approval letter includes an expiration date, usually within 90 days.
Not hiring house inspector and real estate agent
Searching for a home can be stressful and time-consuming, especially if you have a full-time job.
Hiring an experienced real estate agent can save you stress. You only need to inform the agent of your budget, preferred location and choice of home.
They are also likely to have access to listings you may not know about. Likewise, their service can come in handy in helping you decide on the best home for your purpose.
A home inspector will help you check if the house is safe to inhabit.