The purchase of your family home is often the most significant investment you will make in your life. Due to the excitement of buying a home for the first time and the stress of its financial ramifications, you may be prone to making some common home buying mistakes. This article discusses nine mistakes that first-time purchasers make and how to avoid them.
1. Working with an inexperienced real estate agent
A real estate agent plays a significant role when buying a home. They help you find houses, contact sellers, read and explain contracts, and so on. Therefore, using an inexperienced realtor would be an expensive mistake. Before you select an agent, be sure to conduct a thorough research by reading reviews of agents near you. You can also ask trusted friends and family for recommendations.
2. Doing it all by yourself
Purchasing a home is a long process that involves several considerations. It may be prudent to delegate duties requiring specific technical knowledge to professionals. Hiring professionals would help you gain the right understanding to make the right decisions. For example, you may want to leverage legal professionals like Aston Knight Solicitors for advice on legal issues. Or you may consult a chartered accountant on financial inquiries and advice.
3. Not getting pre-approved first
Before looking for a house, you should contact your local banks to ensure you are pre-approved for a loan and are eligible to apply for loans such as a mortgage. This way, you can go house-searching in confidence, knowing you can rely on the bank to aid you with your purchase. Being pre-approved also indicates to sellers your commitment to wanting to purchase the home. It also makes it easy to get in contact with mortgage brokers. A mortgage broker shops for the best mortgage rates on your behalf from various financial institutions.
4. Ignoring additional costs
Property taxes, insurances, repairs, and other relevant fees must all be factored into your budget. When you purchase a home, you will be responsible for all major repairs. This is in contrast to renting when the landlord is liable for all maintenance. In addition, some homes include a homeowner’s association charge that buyers must pay. It is vital to know these costs before purchasing the home.
5. Not shopping around for options
When homebuyers don’t shop around for a mortgage, they risk losing a lot of money. Applying for a mortgage with a few different lenders provides you with a better idea of what you can afford. It allows you to compare loan packages, interest rates, closing costs, and lender fees on an apples-to-apples basis. More importantly, looking for a mortgage puts you in a stronger position to bargain with lenders for the best offer. Pay attention to fees and closing charges as you shop for lenders, as they can mount up quickly at the closing table.
Although some of the price differences may not appear substantial at first glance, they can add up to significant savings over the life of your loan. Remember that some lenders will offer you discount “points” as a means to lower your interest rate upfront. Other lenders that advertise low or no closing costs typically offer higher interest rates to compensate for the discrepancy.