Common Mistakes Made by Home Buyers
Below is a list of 6 mistakes that buyers commonly make when searching for a home to buy.
1. Being Unsure Of How Much House You Can Afford
The bank has its guidelines to follow when calculating the loan amount you can afford for a home along with other debts no matter what you think you can afford. While some may spend 40-60% of their monthly income on housing, the bank will see it a different way. What you should do is add up all of your recurring bills each month, but leave out your rent. Do include your car loan or lease payment, credit card payments, and student loan bill.
Many home buyers overlook their car and renter's insurance fees when paid annually as well as any yearly professional license fees. Even though some or all it may be tax deductible, those need to be deducted from your take home pay and then you'll know how much you can spend on your new home each month.
Otherwise you could find yourself making appointments to drive around looking at homes that are actually not in your budget. You should reduce your monthly expenses and/or increase your income prior to searching. (Use our calculator to adjust the income and expenses to learn more about debt and income ratios.)
2. Neglecting to Get Pre-qualified or Approved
As mentioned earlier, a lot of people are surprised to find out that what you believe you can afford and what the lender feels you can afford are worlds apart, especially if your credit scores are lower than you thought or your income fluctuates one year to the next, so make it a point to get pre-approved for a loan before putting in an offer on a home.
If you neglect this important step, you could be putting yourself in jeopardy of losing any down payment deposit you made on your offer. Not to mention wasting your agent's time and the sellers if the bank is offering you a home loan on terms that are not acceptable.
3. Not Remembering to Factor In Other Costs
The moment you're the owner of your home, paying the property taxes, hazard insurance, and fixing any necessary items the house requires is an expense you'll incur.
If you're purchasing a a beautiful condo overlooking Sarasota's Bay, the golf course or anywhere, you'll be required to pay maintenance costs each month no matter of if anything has to be fixed or not since it is a condition from the homeowner's association.
4. Giving in to Essential Items
Don't get a home that is below your require square feet minimum if you are 100% sure you'll need a 3rd or 4th bedroom. Don't buy a home far away because it is significantly cheaper yet it adds a 45-60 minute commute time each way to work and you are the type that simply loathes traffic. Of course, compromises can be made, but not ones that bring on more stress such as having to look for a new place all over again.
5. Failing to Do a Physical Inspection
Before you buy a house, you should be aware of what kind of condition the house is in. Was there a flood, fire damage? Is the electrical wiring up to code? Is the plumbing system working properly? You don't want to get trapped owning a house with a lot of surprising repairs which translates into more costs.
6. Not Choosing to Hire an Agent or Using the Seller's Agent
If you're serious about finding a home, don't start without having a licensed real estate agent unless you know all the ins and outs of contracts and have a solid education in this field. Agents submit purchase offers on your behalf to the seller (or seller's agent) and protect your best interests.