To some, buying a home can be one of the most exciting things in their lives. But more often than not, several others end up walking into what they later experience as buyer’s remorse. This is a thing with first-time buyers who, due to their lack of experience and preparation, make a number of hasty or careless mistakes that put them in a financially damaging position.
To ensure you stay on the right track, you need to be wary of the following common mistakes when buying a home:
Mistake #1: Buying A House When You’re In Debt
Buying a house when you’re swimming in debt is like trying to swim with weights tied around your arms and legs. No matter how hard you try, you won’t go anywhere but the bottom of the water level, eventually sinking to your own demise.
Debts are nothing more than a hindrance that holds back on potential savings for your house in the future. Having the mortgage be placed on top of other monthly debts such as car loans, credit cards or student loans means that you’re only one step closer to foreclosure.
So, before you make your move on your new house, it will be wise to discard all of that debt and then work to construct and maintain a consistent full emergency fund to prevent ever going back to debt again.
Mistake #2: Not Doing Relevant Research and Preparation
Signing everything right away without looking into the details is another one of the biggest home-buying mistakes that potential homebuyers can make. The best way to go about things is to analyze assets, figure out debts, and get yourself pre-approved for finance before you go house hunting.
Besides that, you also need to learn about the neighborhood. After all, it’s not just the house you’re buying, it’s also the location. You should also find out about transport, crime levels, quality of schools, and possible zoning issues. In the end, not every new place would be ideal for one’s liking.
Mistake #3: Getting the Only One Rate Quote
Shopping around for a mortgage is like shopping for an expensive item, like a car. You can’t just buy from one dealer without comparing it with others first. Mortgage interest rates are different from one lender to another and so are fees like discount points and closing costs.
Unfortunately, the Consumer Financial Protection Bureau reports nearly that half of the borrowers don’t browse around for a loan.
So, to avoid this error, you have to apply with several mortgage lenders. NerdWallet says this can save about $430 of interest in the first year when they compare five lenders. Every mortgage application that is made under a 45-day period will be recorded as a single credit inquiry.
Mistake #4: Not Researching the Builder
This is just as relevant as not researching for a proper home. How do you know the contractor that you potentially hire to build your house instead of buying one isn’t going to do a half-baked job and end up leaving you in the middle of the process? That’s why you need to do as much research as possible to choose your contractor or home builder. One of the most reliable names is Ballymore Homes especially for those who are looking for new homes for sale in York Region Ontario.
Mistake #5: Picking the Wrong Mortgage
In order to get yourself into the best negotiation deal possible, it’s highly pivotal to pre-approve your loan (not only pre-qualified) before you attempt to purchase a house.
You need to find out how much you can afford for a new home. However, you can’t assume that you’ll get a loan by visiting the bank’s official website by using their calculators and see how much you’re able to borrow.
There’s a huge difference between how much you believe the banks will lend you and what they will actually lend you. That’s why it’s crucial to carefully choose a proper finance package. As we said earlier, you shouldn’t just go with one lender when there are several others that you can compare the mortgage rate with.
Better yet, seek out an independent finance broker who is in contact with a huge line of lenders and has access to financial products.
Mistake #6: Not Placing a Big Enough Down Payment Possible
According to Alan Hedrick from Compass, one of the biggest home buyer mistakes that homeowners make is not putting up enough down payment possible. He says that doing so could reduce one’s monthly mortgage spending significantly. That’s why it’s alright to ask for assistance, such as a down payment gift, especially if it helps you own your property faster.
Mistake #7: Only Going for A House’s Appearance
This can be a two-sided issue and can be troublesome either way. The first is only going for a house that looks good on the outside from its fixtures, finishes, and beautiful decorations. This is otherwise known as eye candy. Some home buyers are too occupied about a house’s superficial details without bothering to give a closer look and see whether everything is right as rain. They also overlook other details such as the yard, the location, or perhaps the house is situated on a busy street.
Another thing that shoppers overlook is that despite a house being in dire need of a new coat of paint and other cosmetic changes, it comes with a great location and a solid foundation. Therefore, when you’re trying to purchase a house, you need to keep both the cosmetic aspects that need to be changed, as well as those that are either too pricey or even impossible to fix.