7 Common Homebuying Mistakes You Should Avoid
Buying a new home is a momentous milestone in anyone’s life. But the homebuying process is never easy. While purchasing a home is exciting, it can be very overwhelming, especially for first-time homebuyers. If you haven’t done your due diligence, you might be eaten alive by the stiff competition and bidding wars in a red hot market. Furthermore, first-time homebuyers might encounter disastrous mistakes that could lead to delays and financial frustrations.
To make the process less stressful and more efficient, you need to be careful of the following common (yet avoidable) homebuying mistakes:
1. Not having enough savings to fund your dream home
Not saving enough money to cover the expenses of buying a home is a common mistake most first-time homebuyers make. According to real estate expert Dave Ramsey, you must save up at least 25% of the sale price in cash if you’re planning to get a mortgage. This will cover the down payment, closing costs, and moving fees.
Aside from the aforementioned expenses, you also have to save up for other costs. These include homeowners insurance, property taxes, utility bills, and homeowners association (HOA) fees if you’re moving into a townhouse or condominium. To save enough money, you can downsize your monthly expenses, reduce a costly (but wasteful) habit, ask for a salary raise, or find a side hustle to fund your dream home.
2. Not getting preapproved for a mortgage
If you’re planning to mortgage a home, getting preapproved for a loan can ease the homebuying process for you. First, it helps you determine how much you could actually afford. This enables you to stay within your price range and avoid getting overburdened by something beyond what you could financially handle. Furthermore, buyers who have been preapproved are more appealing to sellers, giving you an advantage during bidding wars.
On the other hand, buyers who haven’t been preapproved tend to lose during negotiations. They could also set their sights on a home that is beyond their financial ability, which could lead to financial issues along the way.
3. Forgoing a home inspection
Before buying a home, it’s important to make sure that you’re getting what you were promised in the listing description. However, some buyers choose to forego home inspections, especially during a seller’s market where bidding wars are intense and houses are selling fast. As a result, buyers get frustrated when they find major issues on the residential property, which they were not aware of during the sales process.
To avoid future problems with your house, you can hire a professional inspector who will thoroughly examine the condition of the home. Once the home inspection is done, you’ll receive a report with any current or potential issues found on the property. You can use these findings to negotiate repairs with the seller or lower the asking price.
4. Not researching the neighborhood
Living in an unfavorable neighborhood will most likely spoil the fun of moving into a new home. Before closing the deal, make sure to research the neighborhood so you know what you’re getting into. This will help you avoid the so-called “buyer’s remorse” and save you a lot of headaches later.
Start by walking around to experience the neighborhood yourself. You can also talk to people who have lived there for a long time to determine any possible constraints that you might encounter. You may also consider the walkability and convenience of the neighborhood; accessibility to schools, business establishments, and lifestyle amenities; as well as crime rates.
5. Not consulting a real estate agent
Buying a home requires a lot of negotiations, paperwork, and other processes to ensure a smooth sale. If you don’t have the time, knowledge, and network to deal with all these alone, you might want to consult a real estate agent, especially if you’re a first-time homebuyer.
Real estate agents are experts at dealing with home purchases in your local area. While you can always buy a house without an agent, working with one will ease the homebuying process for you. A real estate agent can give you valuable knowledge about your local housing market, help you find houses faster, connect you to other industry professionals, and manage all the paperwork. Moreover, agents can also negotiate with the seller on your behalf to reduce the asking price or include home repairs in the sale.
6. Making decisions based on emotions
If it’s your first time buying a home, it’s so easy to get caught up in all the excitement of touring one house after another. But buying a property is not just an emotional process—it is more importantly a financial transaction. And just like any significant investment, you should always make decisions based on facts, research, and sound insights.
For example, when you find your “dream home”, you might end up spending more than you should on homeownership that you no longer have enough money left for other important expenses. You could also overlook or ignore significant issues in a house you’ve “fallen in love” with (and purchase it right away!) only to regret it later. To avoid getting too emotional during a home transaction, just take one step at a time and consult a real estate professional so you’re on the right track.
7. Making a rush offer
Lastly, don’t rush to make an offer. During a hot market when homebuying competition is tough, first-time homebuyers might be tempted to immediately make an offer without considering the property carefully.
Before making a decision, consider whether the home is the right fit for you, your family, and the lifestyle you want to pursue. It’s also crucial to follow the necessary steps when buying a home, such as checking the neighborhood’s safety and accessibility to life’s essentials—education, employment, transportation, etc.
Buying a home is an exciting chapter in our lives that should bring happiness and peace. However, when we don’t make the necessary preparations, we could end up with a miserable home and impulsive decisions that lead to remorse. While the homebuying journey is filled with bumps and potholes, there are several mistakes that we could always avoid, especially for first-time homebuyers.
To recap, here are 7 common homebuying mistakes that you should steer clear of for a smoother transaction:
- Not having enough savings to fund your dream home
- Not getting preapproved on a mortgage loan
- Forgoing a home inspection
- Not researching the neighborhood
- Not consulting a real estate agent
- Making decisions based on emotions
- Making a rush offer
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