Common Mistakes Home Buyers Make
Common Mistakes Home Buyers Make
Buying a home and relocating is an exciting process that will allow you to invest in your future and settle down. For many people, there are common mistakes that are made due to a lack of experience in the real estate industry. If you want to avoid losing money or delaying the process, there are a few mistakes to avoid.
Forgetting About Closing Costs
Most people are aware of the importance of saving enough money for a down payment on the home when they're ready to buy but often forget about the closing costs. Most people can expect to pay $3,000 to $7,500 or two to five percent of the home. The closing costs cover origination charges, inspection fees, title insurance, the application fee, a credit report, and an underwriting fee.
Failing to Evaluate the Neighborhood
It can be easy to fall in love with a home and make an offer before taking a look at the surrounding neighborhood. Although the house may have everything that you need, it doesn't mean that you'll enjoy living in the local area. Make it a point to check out the surrounding properties and determine if they're maintained well. The yards should be mowed, and the homes should be in excellent condition. The area that surrounds your home will have an impact on the value of your property, making it necessary to find a home that's in a great location.
Considering Future Needs
You should plan to live in the home long-term to ensure that you can build equity and don't lose money with the transaction. Instead of just thinking about what you currently need in your new home, you'll also want to consider your future needs.
You may need to move your parents into your home at some point or will need a larger backyard once your kids become active as they grow and develop. Planning for the future will allow you to find a property that works for your lifestyle long-term to ensure that you don't need to move again in the near future.
Maxing Out on Your Mortgage Limit
You may be excited to have more money to spend with the amount that is provided by your lender, but maxing out on it will limit your financial flexibility. You'll need to cover other expenses when purchasing the home and will also need to have wiggle room if your income changes in the coming years.
Allowing Your Credit Score to Change
Many people assume that if they're pre-approved for a home loan, then they can open new credit accounts or acquire more debt. Make it a point to continue paying your bills on time and avoid adding more charges to your account, which can put your loan at risk before you close on a house. You'll also want to avoid switching jobs or becoming self-employed, which will increase the risk for the lender if you're at a new job.
Purchasing a New Car
Many people decide to buy a new car that will look great in the driveway of the home that they purchase, but buying a car will affect your debt to income ratio. The lender will immediately notice the change in your credit and will reduce the amount of money that they allow you to borrow or will even deny your application if you become too much of a risk. Consider buying a used car in cash if you really need a new set of wheels while shopping for a house.