Five Mistakes To Avoid When Buying A Home
Buying a house is no simple endeavor, so it stands to reason that there are many mistakes you can make throughout the process. However, if you learn from others' mistakes, you can avoid making those same mistakes yourself. Here are five mistakes to avoid when buying a home.
1. Assuming that all new homes are outside of your budget.
If you are on a somewhat limited budget when it comes to your home—and who isn't—you may assume that buying a brand-new home is not an option for you. New homes are often seen as a posh, overly expensive option, whereas homes that have been previously lived in are more affordable. This may be the case in some areas, but it is not true everywhere. Builders often offer great deals on new homes in order to make them competitive with the previously owned homes on the market. You may be able to find new homes for sale for only $10,000 or $20,000 more than a similar home that's 20 years old. So don't assume buying new is out of your price range until you take the time to actually look at local prices.
2. Not getting pre-approved.
The real estate market is hot these days. Houses sell within hours of when they are put up for sale. If you want to be able to make an offer and have it accepted, you need to be pre-approved for a mortgage. In other words, you need to visit the bank and have them look over your financial information to ensure you are worthy of a loan. If you meet their qualifications, the bank will give you a pre-approval letter, which you can submit when you make an offer on a home. Without this letter, the homeowners would not be likely to accept your offer.
3. Buying too much house.
There's a saying in the housing industry that your monthly mortgage payment should be no more than 1/3 of your take-home pay. This figure may work well for some people, but not for everyone. Particularly if you have a lot of other bills, like student loan payments and car payments, you may find yourself stretched pretty thin on a mortgage bill that equates to 1/3 of your take-home pay. A better way to determine how much you can afford is to sit down and list out all of your bills. Add them up. Then, subtract the total from your monthly take-home pay. Divide that amount in half, and that's about how much you can afford to put towards a mortgage each month.
4. Forgetting about closing costs.
When you do buy a home, you need to be prepared to pay lawyers' fees, inspector's fees, deposits to your new utility companies, and more. Make a list of these costs, which your real estate agent can help you to estimate, and make sure you set aside money to cover them. You don't want to be stuck without the money you need to close on the house of your dreams.
5. Not looking into the neighborhood.
This mistake is especially common among first-time home-buyers. You may find a house you like and get so excited about the house itself that you forget to consider what is around it. If the neighbors are loud or neglectful, or if the neighborhood has a high crime rate, you will soon fall out of love with your new home. So, pay attention to your surroundings when you look at homes, and make sure you like the area around your house as much as the house itself.
If you can avoid the mistakes above, your house buying experience will be a lot easier.