Buying a home is probably one of the biggest investments of your life.
Photo by form PxHere
There’s no doubt, a lot of anticipation and excitement. At the same time, there is the stress of its financial implications. Both these states of mind make a first-time home buyer prone to making errors in the process.
If you are a first-time buyer of a property, we’ve compiled a list of the top mistakes you must avoid while making your decision.
Not buying according to your budget
Some people fail to set up a budget when planning to buy a house. They may end up looking at houses that they simply can’t afford or are below their optimal price level. Many first-time buyers get starstruck by beautiful properties and end up going over budget.
To avoid this costly mistake, always begin with a budget before you set on a spree of viewing different properties. To understand if a property is within your budget, first, check the deposit amount for the house and how much you have saved to finance that, then check the loan you have to take to finance the remaining price of the property.
The loan amount you take along with the interest will decide the monthly payments you will have to make to the bank. Subtract this cost with your income and see what is left. If you are spending more than 60-70% of your total income just to cover the monthly payments, move on to another option, the house is over your current budget. Once you have these numbers, stay clear of the houses with the same price tag. If you want to skip these calculations, you can opt for a real estate agent who is adept at simplifying this process and can do calculations on your behalf.
Getting only one rate quote
Looking for a mortgage is just like shopping for any expensive item, and many people end up getting just one quote, which is a red flag. Mortgage interest rates vary between lenders, as do other related expenses such as discount points and closing costs.
Don’t settle for the one rate quote. Instead, reach out to multiple mortgage lenders and find the most beneficial plan given your budget.
Not calculating the costs of repair and renovation
You shouldn’t overlook this point if you are buying an old property. Many buyers miss calculating the cost of repair and renovation and end up paying way too much to bring the property up to their expectations. Another mistake involves not shopping around for the right contractor to make improvements.
After the home inspection process is over, ask your inspector to give you a report calculating the actual costs associated with repairs and renovations. If the repair rates are too high and do not fall under your budget, look for another property to buy.
Not paying attention to personal credit check
When you decide to buy a property and apply for a loan, your lender will inspect your credit report as part of the pre-approval process. Many times, home buyers think they do not need to pre-check their credit report. And that’s where they go wrong.
Checking your credit report lets you know what kind of loans you are eligible for so that you can make a well-informed decision. It also allows you to fix any errors, resolve negative points on the report, and make other essential changes.
Hiring a wrong real estate agent
Your house hunting process goes for a toss if you hire the wrong real estate agent. Your realtor is an important part of your home-buying team. Choosing the wrong one will make it difficult to buy the right property.
Always choose a real estate agent, broker, or service that understands your local housing market. The realtor you work with must be ready to take your house hunting seriously and help you tour homes as per your requirements.
They should also submit an offer and negotiate your contract to make the home buying process easier for you. For example, if you’re thinking of investing in the red hot Colorado real estate market, the Boulder realtors at Burgess Group | Compass commit deep local knowledge, networking, and negotiating skills to help you find the right property. Working with reputable realtors such as Boulder real estate agents can help you avoid most, if not all of the above listed mistakes, and enable you to score the best deal.
Buying a home is a huge investment, and you must take your time to make a decision. Being well aware of the entire lending and real estate process will help you avoid many of these common listed mistakes and also save you money along the way. Ensure that the transaction goes smoothly by letting experienced and trained professionals guide you.