Buying your first house is an exciting time in any new home owner’s life. While it is great to get out of renting and own your home, you will want to avoid making expensive mistakes when looking for your dream house.
Here are six common homebuyer mistakes to avoid when purchasing your first home.
1. Hiring A Seller-Orientated Agent
New homebuyers often hire the first real estate agent they meet when beginning the search for their first homes.
However, some real estate agents represent the sellers of the homes that they show. Listing agents focus on selling the houses they represent, so they primarily focus on the seller’s needs above the buyer’s.
Instead, hire a realtor who will represent you as a buyer. Buyer’s agents will help you find a property that fits your needs and help you to negotiate the price with the seller.
2. Skipping Home Inspection
There are many situations when it may seem like you found the perfect home. Everything looks new, well-maintained, and the yard and house are ideal sizes.
However, there could be much more going on than anyone can see from a simple tour.
Hiring a professional home inspector is an essential step to the home buying process. Problems such as mold or plumbing issues are often invisible at first. Undiscovered, these costly home issues will otherwise take new homeowners by surprise and drain their finances quickly.
Before purchasing a house, ensure that a thorough home inspection is complete first.
3. Not Researching Mortgage Financing Options
It might seem easy to take out a loan with your bank or to choose the nearest lender in your area out of convenience. While this may be a good idea in some cases, sometimes more research is needed to find the perfect mortgage loan plan. Depending on your finances and what type of property you are buying, some lenders offer much better rates than others.
With diligent research, you will be able to find mortgage financing options that help you save thousands of dollars throughout your mortgage term. Lenders that frequently help new buyers get their first homes will make the process smoother and less costly.
4. Purchasing A Home Before Getting A Loan
Before you look for a home, it is prudent to get a preapproved loan first.
Why should you do this? Sellers are often reluctant to agree to an offer when they have no idea if the buyer can afford the home. Even worse, they may back out of a deal at the last moment and decide to sell their house to another buyer.
When you obtain a preapproved loan, this serves as solid proof to a seller that you are financially capable of purchasing a house. The preapproval process often includes a hard credit inquiry, income records, bank statements, and your debt-to-income (DTI) ratio. With this information, your lender can pre-qualify you for a loan within your financial means.
5. Forgetting About Closing Costs
Buyers who are new to purchasing real estate may not be aware of closing costs. Since articles and other resources about buying homes usually focus on mortgage payments, closing costs are easy to overlook.
However, these fees are no small thing. They can be as much as 6% of a home’s value. For this reason, it is vital to save for closing costs on top of a down payment before you start looking at houses to buy.
These costs include charges such as an underwriting fee, home inspection fee, origination fee, and title search. In total, closing costs can range from a few thousand dollars to around $10,000 depending on the price of the house.
6. Buying Above Your Means
Just because a mortgage broker or your bank will approve you for a hefty loan doesn’t mean that you should take it.
Some buyers purchase expensive first homes and later discover that the monthly mortgage payments and insurance premiums are too costly. If homeowners fall behind on their mortgage payments too often, they end up facing foreclosure.
Discussing mortgage financing options with a lender that specializes in helping new buyers is a great way to ensure that you only take out an affordable loan. Asking your lender the right questions will help you learn more about getting a loan and avoiding expensive mistakes.
Knowing what homebuyer mistakes to avoid will save you a lot off stress and money.
Since 1999, Supreme Lending has been helping new home buyers choose affordable mortgage financing options. Find out more about the types of loans we offer today.