No doubt about it, buying a home is one of the biggest decisions you ever have to make. But don't get carried away with the excitement of getting your own home. Avoid these common mistakes that most homebuyers make.
Before buying a house, or any property for that matter, you need to know what could be the reasons for future buyer's remorse. Check out this list of some common homebuying mistakes and tips on how to avoid them.
1. Buying a Home When You Are in Debt
This is one of the most common mistakes made by first-time homebuyers. Remember that debt strains your monthly budget. If you pile a mortgage on top of your monthly debt, you are putting yourself one emergency away from foreclosure.
To avoid this, you should first finish paying the debt that burdens you. The next thing you need to do is build a full emergency fund. Be sure to maintain it as it will be your protection that will keep you from being in debt again. And while doing all these, set aside home buying for now.
2. Searching for a House Before Applying for a Mortgage
Another mistake that lots of first-time homebuyers make is searching for homes before getting in touch with a mortgage lender.
The housing inventory in some markets is tight because the buyer's demand is greater than the affordable homes on the market. On the other hand, you could lose property in a competitive market if you are not preapproved for a mortgage.
DON'T MISS THIS : Mall of America Behind on $1.4Billion Mortgage Payment
You might think that searching for a home first is a normal thing that homebuyers do. But it does affect you because you might look at houses or properties that you cannot afford.
To avoid this, you should first get a fully underwritten pre-approval. It's important because it means you are a serious buyer with good finances and credit.
3. Buying a Home That is Out of Your Budget
For some, it's an obvious red flag. However, it is still one of the common mistakes homebuyers make all the time. Most of them will take out a bigger mortgage just because they found a home that is perfect for them, even if it costs more than they plan to spend. However, it is a bad idea.
If you take more mortgage than you can afford, you will wipe out your other financial goals. It will also be a struggle for you to pay even the electric bill.
READ THIS : Thinking of Crowdfunding Your Mortgage Downpayment? Here's What You Need to Know
One of the most important things you need to consider when buying a home is your budget. Only look for places you can afford.
4. Ignoring the Moving Expenses and Closing Costs
Other homebuyers focus too much on saving for the downpayment. They often forget about moving expenses and closing costs.
Closing costs include home inspection fees, appraisal fees, property taxes, and different types of legal and insurance expenses. It can be 3 to 4 percent of the home's value.
Moving expenses, on the other hand, differs depending on the moving options. On average, the cost of a local move ranges from $500 to $1000 for a house with three bedrooms.
You should not forget other expenses. It's best to plan and save money ahead for these costs. Do not try to steal from your emergency fund or down payment amount because you will need those in the future.
FIND OUT HERE : What Exactly Does A Real Estate Agent Do?
There is a long list of homebuying mistakes most first-time buyers make. The ones we mentioned above are some of the most common. Always remember that there are a lot of things you need to consider when buying a home. Planning is crucial before making big investments, such as buying a new home.
