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7 Homebuying Mistakes to Avoid

When buying a home, there are plenty of steps to take, decisions to make, and hoops to jump through, which are all part of why buying a home is a major life decision. We have been in the real estate game since 2005, and we have seen it all more than once. Here are some of the most common mistakes homebuyers make, whether they are buying their first home, or downsizing for retirement, and how to avoid them.

Having too much debt

Having some form of debt is fairly commonplace in this day and age between car loans, existing mortgages, student loans, credit card payments, and owing your coworker $10 for lunch. Having too much debt puts you in a bad position to buy a house. If you can’t afford to pay a mortgage on top of the debt you already have, it’s not a good idea to incur more debt. In fact, a mortgage lender may not grant you a high enough mortgage amount to buy a house if you are carrying too much debt. Restructuring your budget and paying down your debts will take time, but it will be worth it when you own a home.

Buying before being prepared

Making the jump from looking at homes online to actually shopping for homes and making offers is not one to take lightly. Before making this decision, it is important to get your finances in order, save money, and evaluate how your current living situation differs from what you want. If you think you are ready to buy a home, contact a local real estate agent from a locally-based real estate company. They will have answers to all of your questions regarding finances, local home values, and the overall status of the local real estate market.

Not shopping for mortgages

After you start working with a local real estate agent, you need to start looking at how you are going to pay for your home. If you are like the vast supermajority of homebuyers, you will be paying with the help of a mortgage. However, you should start looking for a local mortgage lender like buying a car. Check out multiple places to see which offers you the best rates, most friendly costs, and suits your needs. Start by taking your agent’s recommendations for lenders they trust. From there, ask people you know who are homeowners about who they used. Buying a home is a big decision, so do your due diligence at every step.

Skipping mortgage pre-approval

Once you get a lender secured, get pre-approved for a loan. Pre-approval is one of the best and most powerful tools buyers can use when putting an offer on a home. When you get pre-approved, your lender looks at your financial situation and determines the optimal price range for homes you can afford. Not only will you have a solid budget to shop for homes, but sellers prefer buyers who are pre-approved because it shows that your offer is genuine and that you are already getting financing secured. Naturally, this is preferable to both buyers and sellers that buyers are being proactive.

Buying more than you can afford

Once you know your budget, it may be tempting to search near the top of your buying power. However, just because you can spend that much, it doesn’t mean you should. You have to keep in mind things like how much the sale price will make your mortgage payments, HOA dues, and maintenance, and how all of that fits into your everyday financial needs. Overspending is a great way to become house-rich and cash-poor

Not factoring in closing costs and moving expenses

This ties into overspending. Closing costs account for 2%-5% of the home’s purchase price and are primarily paying for title and escrow fees. After that, there are the costs incurred during the move itself. When making plans for how much you will put forward for a down payment or earnest money, consider these costs that are incurred at the end and after the sale.

Choosing style over substance

While home shopping, it can be easy to be turned off by certain aspects of the home that are fixable after you move in. Walls can be repainted, appliances can be bought, and style can be changed with your own belongings. What is more important is that the home is the right size for you and your needs, and is in a town/part of town that you want to live in.

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