Buying your first home can be nerve-wracking if you don’t have the right team to guide you through the process. After helpings thousands of families buy their home, we have come up with a list of the 5 most common home buyer mistakes and how to avoid them.
#1 Making an offer without determining buying power
Shopping for a home before you are pre-approved with a lender is a recipe for disaster. Spending an hour with an experienced lender will give you a good idea of your potential monthly payment, minimum/maximum purchase prices, your loan type, and a timeline for your closing.
This will narrow down your home search and avoid wasting any time on homes you can’t afford. It also may determine the overall location you buy in and can be used during the negotiation process.
#2 Not realizing that the wrong mortgage can cost thousands
Buying a home is the biggest purchase most people will ever make in their lifetime. When selecting a mortgage, remember that you will spend the next 30 years paying it off. Picking the wrong mortgage could cost you thousands over the span of your life.
Make sure to research your options and have your lender thoroughly explain your choices. Building a pros and cons list for each loan product will help you understand each choice and what it means for your family long term.
#3 Forgetting that credit plays a large role in your ability to buy or refinance a home
Credit is one of the first things a lender looks at when qualifying you for a home loan. They want to analyze the risk involved with giving you a mortgage and whether it makes sense for them. While you may still qualify for a home loan with sub-standard credit, it can come at a higher price.
Borrowers with less than exemplary credit tend to get higher interest rates and mortgage insurance payments to offset the risk of you defaulting on the loan.
#4 Missing hidden defects before purchasing the home
When you transition from renting to owning, you find out being a homeowner means you get to fix anything that goes wrong. Buying a home with structural issues can be a money pit. Often you will find this out once you are in contract and an inspection is done, but at that point, it can be too late.
To avoid this, find an experienced and knowledgeable real estate agent that has helped purchase hundreds of homes and knows exactly what to look for.
#5 Not using a Buyer’s Agent
Not using a buyer’s agent is one of the biggest mistakes you can make as a home buyer. When you purchase your home, you are entering into a binding agreement with the seller and their representation. Deciding against using a buyer’s agent is like going into court without a lawyer. While you may come out on top, it is not always likely.
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