Buying property used to be quite an obscure process for the average person. However, now with the Internet, it’s a lot easier to get a hold of all the necessary information. And yet even with this, we still commonly see people making certain mistakes when buying a new home. Whether people oversimplify the process by avoiding the math associated with it or stressing themselves out by focusing too much on things like mortgage interest rates, there are plenty of mistakes to avoid when purchasing a home. The tips in this list of the most common ones should help you properly steer clear of them and manage a successful home purchase.
Neglecting to work out the math
Working out the math of how much you have to and can spend on buying a new home is likely the most important step. Of course, this seems very obvious to most people. However, you’d be surprised by the number of buyers who do this half-heartedly. The point of working out a budget is not to get a general idea of what you can afford. The point is to be precise so that you can avoid facing any unforeseen and unpleasant financial surprises.
One of the most common ways people make this mistake is only to consider the down payment and purchase price. As a buyer, you are guaranteed to face many more expenses and fees later on. And this doesn’t just refer to things like doing repairs once you move into a home. Extra fees can come up as soon as you start looking at homes. From home inspections to moving expenses, there’s much more to consider when buying a home.
In most cases, you will benefit more from overestimating expenses than getting everything exact. This can completely change your view of what you can afford. For example, you might realize that to move to your desired area, you would have to downsize. While this is not necessarily a bad thing, it is an important thing to know.
Don’t forget a mortgage pre-approval
Getting pre-approved for a mortgage is a great way to show that your estimates regarding what you can afford are accurate. While they’re on calculators and similar online tools to help you get as accurate an estimate as possible, your best option is still to get an exact idea you can be sure of. That way, you will know what your price range is, and you’ll be able to find the best home for you within it. Additionally, getting pre-approved gives you more security financially. Once you are told your mortgage rate, you will agree on a term with your lender (usually 120 days). If the mortgage rates go up during this time, you won’t be affected by the increase. And if they go down, you will be subject to the lower price point.
Being unspecific about the desired location
Another one of the most common mistakes to avoid when purchasing a home is not being specific about where your desired home would be. We recommend deciding on a single neighborhood rather than letting the real estate agent look at homes throughout an entire city. This is an especially important step when buying from afar since it also lets you get familiar with the area of your future home. Taking this step when buying a house remotely will save you lots of trouble and make the whole process a lot less bothersome since it’ll allow you to go into much more depth when searching within that area. Remember that you don’t have to be extremely adamant about this area. If you don’t find anything there after searching thoroughly, it’s all right to move on to another one.
Focusing too much on mortgage interest rates
Another one of the most often made mistakes to avoid when purchasing a home is buyers focusing too much on mortgage interest rates rather than the mortgage solution. While they are extremely important to account for when budgeting, other things are more likely to affect the full cost of home ownership. This includes different types of mortgages, their flexibility, and payment structures. Let’s discuss both fixed and variable-rate mortgages as they create the most important distinction.
Fixed Rate Mortgages
When applying for a fixed-rate mortgage, you are essentially locking in an interest rate for the full term of the mortgage. This is highly beneficial since it provides more financial security and makes it easier to budget.
Variable Rate Mortgages
The rates in a variable rate mortgage change based on the prime lending rate. This means that if the rate goes down, more of it will go to the principal and vice versa. While they provide less security and require a little luck, these mortgages offer much more money-saving potential down the line.
Judging a book by its cover
This is one of the most common mistakes to avoid when purchasing a home with first-time homebuyers, although no one is safe. When you’re viewing a home, your time is limited. It is a huge waste not to be attentive during it. Your best bet for this is to compile a comprehensive list of the most important aspects of what a home needs to offer you aside from the superficial things such as curb appeal. For example, your list could include the following:
- Checking the walls and ceiling for moisture
- Looking for rot in woodwork
- Check for obvious signs of plumbing issues (ex. weak flushing toilets)
- Check for missing shingles by looking at the roof from afar
- Check gutters for damage
- Check electrics by turning lights on and off
Aside from these general assessments, there are also specific things to check out with specific home types. For example, if you’re buying a beach house, you’ll want to check whether all doors and windows are in good shape and properly installed. This is important as they stop sand from getting into the home. Of course, a home inspector will later check out all of this. But, it’s much better to avoid spending money on an inspection altogether if you find unacceptable problems even without it.
To conclude
Buying a home has never been easier than it is today. With all of the necessary information and strategies and a good real estate agent on your side, the whole process is sure to go over smoothly and swiftly. Being aware of these common mistakes to avoid when purchasing a home is your first step toward achieving that goal. Remember to work out all of the math, think your mortgage options through thoroughly, and be specific about what you’re looking for.
Story courtesy of Lisa Roberts | Moving Experts US