With today’s rising interest rates and high home prices, buying a home takes some planning and forethought. Mistakes can be costly, like getting a mortgage higher than you can afford or getting stuck in a neighborhood or house you actually don’t like. Here are eight of the most common homebuyer mistakes and how to steer clear so you make a satisfying purchase.
Mistake #1 – Shopping Before Getting Mortgage Approval
It can be exciting to get right out and start looking at houses when you think you’re ready to buy but talking to a mortgage lender is the smartest first step. With just a few pieces of information, you can get pre-approved for a mortgage, which means you have the backing of a lender when you start your home search. The pre-approval letter will also let you know how much money you qualify for and can give you a good ballpark of the maximum home price you can afford. Getting pre-approved also gives you a chance to ask the lender any questions you might have about the mortgage finance process before it starts.
Mistake #2 – Failing to Check Your Credit Score
It is a good idea to know what your credit rating is before you even start the homebuying process. You can check it for free from any of the three major credit-reporting agencies. Your score will determine, in large part, whether you are approved for a home loan and what type of interest rate you get. If your score is currently on the low side, you may consider waiting to buy until you can bring it up significantly.
Mistake #3 – Not Having a Clear Vision of Your Home Preferences
It can be difficult to know what you really want in a house if you’ve never owned before, but you’ll be much happier in the end if you can identify the most important features, your “must haves.” While no home is perfect, if you can find one with the majority of your priority list, you can always make enhancements later. Also, be sure to be on the same page with your spouse or co-buyer about what you feel is essential in a home.
Mistake #4 – Failing to Research the Neighborhood
The right house is not solely about the floor plan and the price tag. If you plan to stay for any length of time, the house needs to be located in an area that fits your lifestyle. Make sure you drive through the neighborhood during the day and at night to get a feel for the vibe. You can check online databases to see the crime statistics in the area as well as the school ratings. The location should also match your preferences for how close you want to be to shopping and entertainment.
Mistake #5 – Buying More House Than You Can Afford
Buying at the top of your mortgage lending limit is not usually the best move. Even if you can afford your monthly mortgage principal and interest, there will be homeowners’ insurance, property taxes, and home repairs and maintenance to factor into your budget. After you factor in all these costs, it is smart to keep them to no more than 28% of your monthly income.
Mistake #6 – Forgoing a Home Inspection
Once you’ve found the right house, it can be tempting to speed the process up by waiving the home inspections. This is a big no-no. A home inspection can turn up major issues with the house that need to be resolved before you buy. At the very least it will give you a comprehensive look at the condition of all the major systems, appliances, and structure.
Mistake #7 – Making Big Purchases During the Mortgage Approval Process
Once the finish line is in sight, you are going to want to go out and start buying the right furniture and fixtures for your new place. However, any large purchases made during the mortgage underwriting process can hurt your credit and potentially hurt your chances of being approved. Hold off on buying appliances, furniture, or any other major items until the loan closes.
If you're in the market for a new home, give us a call today. We'd love to help you get pre-approved for your mortgage so that you can buy your next home.
These materials are not from HUD or FHA and were not approved by HUD or a government agency
Thanks Lisa and Terry for helping with my home purchase during high interest rates AND high home values...your knowledge and assistance helped me tremendously!