15 Mistakes Buyers Make When Purchasing a Property
Here are 15 common mistakes new home buyers make which can prove costly:
- Prioritizing the transaction over the loan. The home buying process starts with mortgage prequalification unless you can pay the full amount upfront. A prequalification will help you qualify for a loan that can mitigate your budget.
- Choosing the wrong mortgage. It is vital that you have your loan preapproved before seeing which mortgage options will work for you. Find out how much you can afford beforehand and how much you can borrow. That way you will have enough left over each month for other household expenses and can take care of your family.
- Being influenced by the market. Analyze your needs and now what is popular on the market and you will make the right decision. The market moves in cycles so if you are a buyer in a seller’s market, waiting for the prices to go down will be a gamble.
- Exceeding your budget. Even if you find your dream home chances are you might not be able to afford it. Buying a home that is out of your price range will derail the finances you need for the future.
- Forgetting additional costs. You won’t just be buying a home, you will also be accepting all of its flaws which need to be paid for later. This includes maintenance issues and property taxes which can be quite costly.
- Ignore credit reports. The cleaner your credit report and the higher your credit score, the more likely you will be approved for a low interest mortgage. If your report has seen better days, take some time to clean it up by clearing out some debts before going to a lender. The effort will be worth the money you will save in payments.
- Allowing feelings to dictate your decisions. Even if you have chosen the color and décor for your new home, hire a home inspector to examine it first beforehand. They know which issues may be hidden that the seller may not have revealed and which may cost you down the line.
- Ignoring the contract. Property contracts may seem confusing and complex, but they let you know what you are getting yourself into. This includes additional costs and legalities which you cannot ignore.
- Failing to budget for closing costs. This cost includes the attorney fees, recording fees, brokerage commission and survey fee among others. A real estate transaction always has hidden costs as well such as interest rate hikes.
- Not researching loan options. There are more deals in the market than the one that seems perfect to you. Get multiple quotes around the same time to account for fluctuating interest rates.
- Getting the location wrong. Location is everything in real estate so consider the area where you are purchasing property very carefully. It should be near basic amenities.
- Failing to hire a real estate agent. New buyers usually make this mistake to their detriment. An agent knows how to read the market and which sellers to approach for the best transaction.
- Falling in love with a property. Even if you love a property, if you tell the seller, chances are they will increase the price. Allow your buyer agent to negotiate on your behalf for fair pricing.
- Failing to shop for buyer grants and programs. There are a number of government programs that you can benefit from and which can help you pay for your first home.
- Putting down too little or too much. If you put down too much in terms of a down payment, you won’t have enough cash left for other expenses. If you put down too little, your monthly mortgage payments will increase. A reliable mortgage lender can tell you the best amount.