There’s a lot to consider when buying a home. You have to think about how much you can spend, where you want your house to be located, and what features you need it to have. It’s a complicated process, especially if you’re a first-time homebuyer. It can also be an emotional process. After all, it’s hard not to be emotionally invested when you’re spending a large amount of money on a big, time-consuming purchase.
As real estate agents, we’ve seen and heard it all, which is how we know exactly what you should and shouldn’t do on your way to the closing table. While some issues can be easily resolved, there are a few home-buying mistakes that you really want to make sure you avoid.
1. Buying a house while you’re in debt.
Having a mortgage payment can be stressful enough on its own, so it’s a bad idea to add a mortgage to your debt if you already have car loans, student loans, medical bills, back taxes, etc. You must also consider that getting a home loan while you have other types of debt might be more difficult because you will have a higher debt to income ratio. While you may get a home loan under these conditions, the interest will be steeper and it will take longer for you to pay the loan back. Likewise, if you’re applying for a home loan, don’t take on any additional debt (credit cards, car loans, etc.) until after the loan is approved and the sale is closed.
2. Shopping for a home before you’ve been approved for a loan.
There are a couple of problems with shopping before you’re pre-approved. The first is that you don’t truly know what you’ll be able to afford. This can lead to you looking at homes outside of your price range, falling in love with one, and then ultimately being disappointed when you find out your loan won’t cover the cost of the home. Another reason to get pre-approved before you shop is that a seller is much more likely to accept an offer if there’s a preapproval letter with it.
3. Having a down payment that’s too small.
The smaller your down payment, the higher your monthly interest and mortgage payments will be. Plus, if your down payment is less than 20% of the value of the home you’re buying, the bank will also require you to pay PMI (Private Mortgage Insurance), a type of insurance that protects them in the event you can’t afford your mortgage.
4. Focusing only on price.
Obviously you have a budget to stay in, but that’s not the only thing that’s important when buying a house. You also have to consider things like resale value, school districts, and upcoming construction projects nearby, and how much the neighborhood has changed and will change in the coming years.
5. Making emotional decisions.
It’s tough to find a balance between logic and emotions during the home-buying process, but it must be done in order to make sure you’re purchasing the right home. For example, try not to let current market conditions affect your decision to buy if you’re truly ready. Also, don’t let how much you love a house make you quick to overlook concerns you may have. Finally, don’t buy a house just because you’ve been looking for a long time, had bad luck with past offers, or are just ready for the process to be over, as this is a good way to end up with something you don’t want.
6. Not getting a home inspection.
As a buyer, the home inspection is your chance to make sure everything is as it should be. Find your own home inspector (i.e. don’t take a recommendation from the seller’s agent) and have them do a full inspection on the house. This will tell you everything you need to know about the foundation, roof, plumbing, writing, etc., and whether there are problems with any of these things. If you don’t schedule a home inspection, you could end up buying a house with serious issues without even knowing it. Having the home inspection before closing, on the other hand, gives you the opportunity to negotiate to have any issues fixed before the sale closes.
7. Neglecting to explore first-time homebuyer programs.
If you don’t have a lot of money to put down, there are options for you. Many lenders and credit unions will offer incentives for first-time homebuyers, as will some government agencies. The U.S. Department of Veterans Affairs, U.S. Department of Agriculture, and the Federal Housing Administration all offer special loans to help individuals buy their first home. Just remember to do your research and gain a full understanding of what these loans entail and what your interest rates will be before you move forward.
8. Forgetting all those extra little costs.
You don’t just have to factor in the cost of the home when determining your house budget, you also have to add up all those extra expenses that are part of the home-buying process. You have to think about application fees, closing costs, HOA fees, repairs, renovations, appliances… the list goes on and on. Even after you’re financially prepared for the sale itself, you should always have at least three months’ worth of mortgage payments sitting in a savings account to use in case of emergencies.
9. Not using a real estate agent.
When it comes down to it, the only way to make sure you’re 100% protected is to have the help of a real estate agent. The Wilmington realtors at Network Real Estate have been through the home-buying process countless times before. We’ll use our expert experience to help you find a home that ticks all of your boxes. Give us a call at 910-395-4100 to schedule your first showing today!