For most people, a house is the largest and most important purchase they’ll ever make. It can also be the most intimidating. In order to save yourself from unnecessary stress, or avoid making a huge financial mistake, it’s important that you do your research and take your time.
Here are four mistakes to avoid:
- Spending the maximum amount possible on housing
Before purchasing a home, you need to establish how much you can afford. What you may think you are comfortable paying per month, may differ once you are applying for a loan. Consider life changes like a job loss, going back to school or having children. These life events can impact the type of home you need and how much you will need to spend. When making your decision, it’s important to consider the big picture and remember this is a home you’ll be living in for many years. Also, keep in mind that you will have more responsibilities as a homeowner than you did as a tenant. You will be responsible for repairs, maintenance, homeowner’s association fees etc., so make sure you factor those expenses into your budget.
- Waiting too long to get pre-qualified
Before you even begin looking for a home you should meet with a lender to determine how much you can afford. Failing to get pre-qualified can lead to heartbreak down the road, when you realize you can’t afford your dream home, or, even worse, you might find yourself stretching your budget farther than you should. It’s also possible that you might need to wait and save additional money before securing a loan to purchase a home. If this is the case for you, you’ll want to know as soon as possible.
- Making changes to your credit before closing on the home
Your credit score can make a huge impact on your loan rate. It can also be the deciding factor on if you quality for a loan at all. Before you get pre-qualified make sure your credit score is at its best. Once you are prequalified, don’t take any action that can impact your credit score until you have closed on the home. Lenders look closely at how much debt you have and buying a car right after you’re approved for a home loan could lead to your offer being rescinded later.
- Working without a realtor
Many people are wary of working with real estate agents, but the National Association of Realtors, or NAR, makes sure their realtors abide by a strict code of ethics. Realtors also save you a lot of time by identifying houses that fit your specific needs and wants. They also have access to listings that might not be advertised online. Additionally, while many first time homebuyers aren’t thinking about resale value, realtors can provide insight.. A Realtor can help you determine how likely a house is to sell and how the neighborhood might change over time. Last but not least, Realtors can help refer you to other companies you will need, like an inspection company or title agency.
- Forgoing an Inspection
Approximately 10% of recently purchased homes were not inspected according to Realtor Mag. While some people skip home inspections to save money, finding a major flaw in your new home after purchasing it can be much more costly. Even if a home is newer, or looks like it’s in great shape, it’s still necessary to have it professionally inspected before signing on the bottom line.
Be cautious, trust the professionals and don’t let your emotions impact your judgment and you’ll be well on your way toward a home sale that won’t break the bank.