First Time Homebuyer? – Don’t Make These Rookie Homebuying Mistakes
Think about all those past purchases that you’ve later regretted, from your old Milli Vanilli CD to that exercise contraption that you never use. And while you may have wasted your money on these items that were seldom used, they pale in comparison to the amount of money you’d be spending on a home. That’s one major purchase you definitely don’t want to suffer ‘buyer’s remorse’ from.
Buying property is likely the biggest investment you’ll ever make in life. It’s is an exciting thing, but it can also send you up the creek if you’re not careful.
If you’re a home-buying newbie, steer clear of the following common mistakes that rookies tend to make throughout the buying process. Your wallet will thank you.
Not Finding Out What Your Credit Score is
Your credit score plays a key role in whether or not a lender will say “yes” to your mortgage application. And even if you do get a stamp of approval, your credit score could affect the interest rate you get stuck with. The higher your score, the better. Generally, if your score is 700 and up, you’re looking at getting the lowest interest rate that the lender can offer, which can shave off thousands of dollars from your mortgage.
You’ll want to find out what your credit score is before you even look into getting a mortgage pre-approval. And that means getting your hands on a copy of your credit report. Chew on this fact – over 40 million credit reports have mistakes in them! And these mistakes can have a grave effect on the credit scores that North Americans are walking around with. Catching these errors and disputing them before you apply for a mortgage can ensure that the interest rate you’re given accurately reflects your actual score.
So if you find any errors that could affect your credit score, make sure they’re fixed right away. Check your credit report at least three months before house hunting, and if you spot an error, kindly ask the credit bureau to fix it.
Not Visiting With a Mortgage Specialist
How will you know what you’ll be able to afford if you don’t get your finances in order and get pre-approved for a loan? Even if you’ve got a decent handle on your money, that doesn’t necessarily mean the bank will say “yes” to financing a certain purchase. There are a lot of factors that affect your mortgage application aside from just the listing price of the home.
Before you start pounding the pavement in search of a new house, it’s wise to get pre-approved for a mortgage first. While this doesn’t exactly guarantee that final approval will be granted, it’ll at least give you a specific price range to look within, and it’ll show the seller that you’re serious about buying and that you’ve done your due diligence.
If you’ve been pre-approved for a mortgage that would cover no more than a $300,000 home, there’s no point in looking in neighborhoods where the average home goes for $600,000+.
Falling in Love With a Home That You Haven’t Bought Yet
This is a biggie. Newbie homebuyers have a tendency of falling head-over-heels in love with a home while on the market prowl, only to wind up losing the home for whatever reason. This ends up leaving homebuyers heartbroken and jaded about the market, which does nothing put put a wrench in the process.
You may come across a home that you absolutely adore, but getting emotionally attached before you’ve even signed on the dotted line is a bad idea. What if there’s a bidding war and you lose out? What if you can’t get financing for the place? There are several reasons that could prevent you from snagging that prized possession, so keeping your emotions in check can is important.
Remember – there’s always going to be another house out there. The more homes you visit, the better.
Waiving the Home Inspection Clause
Even the home you’re thinking of buying is new-ish, it still needs to be inspected by a professional after you’ve signed a purchase agreement. You just never know what might be lurking up in the attic or in the plumbing pipes that you might not have noticed during your own inspection of the home.
New homebuyers might skip this step because they get emotionally attached to the property (see #1) and want the place no matter what. Maybe they’re competing with another interested buyer and want a clean contract to get the deal done.
Whatever the case may be, waiving the home inspection is a bad idea.
This clause will help protect you should the inspector find something that would otherwise be a deal-breaker. You’re then legally able to walk away from the deal if something is found that you just can’t live with, or you can even ask the seller to fix the issue or drop the price in compensation. Don’t be afraid to include this clause, and speak up to get things fixed before you seal the deal.
Not Using an Agent
Just about everyone who’s looking for a home will look to the internet to search listings and see what’s out there. That’s fine and all, but when your search starts to get serious, there’s no substitute for a real live agent.
A good real estate agent will find homes that you won’t necessarily see advertised on the net. They’ve got the inside scoop on properties that might not even have hit the market yet. And aside from what the home is priced at and what it looks like, you’ll be able to get a lot more nitty gritty details about properties that the average joe won’t be able to find, such as recently sold comps, neighborhood walk scores, and so on.
You’ll be better armed at the negotiating table if you’ve got a professional real estate agent in your corner.
This last one is probably the biggest mistake you’ll want to avoid, as an agent will help prevent you from making the other blunders in the first place.
Jumping into the real estate market for the first time is exhilarating, and so it should be. But taking precautions is totally necessary if you want to avoid getting stuck in a money pit.