10 Easy-to-Avoid Mistakes for Buying a New Home
Buying a home is a milestone, whether it’s your first or fifth. Moving into a new house represents opportunity—the opportunity to move cities, grow your family, or change your style.
Whatever your new chapter looks like in your new home, buying a house comes with obstacles. It presents challenges you didn’t know to expect. And, unexpected events can get you in over your head or cause you to lose the house of your dreams.
Without the necessary research, your exciting home buying experience can turn sour quickly.
Here are ten home buying mistakes to avoid as you begin this new adventure:
1. Shopping for a house before you’ve applied for a mortgage.
Learning how much you can afford is the first step to home shopping. By applying for a mortgage and completing the pre-approval process, you’ll know exactly what you can afford before you begin your search—no wasting time or falling in love with your dream home only to find out you can’t afford it.
2. Requesting a quote from only one mortgage lender.
Before choosing a mortgage, talk with at least three loan officers. By thoroughly researching your options, you’ll make an informed decision. Lenders will vary by interest rates, as well as loan fees and terms.
Shopping around gives you an understanding of what’s out there, including the welcoming attitude of the lender. Choose someone who makes you feel comfortable and explains your mortgage in clear terms.
3. Not verifying the accuracy of your credit report.
Mortgage lenders will analyze your credit report closely. If there are any mistakes, it could take weeks, even months, to correct your report. This oversight could prolong the home-buying process and ruin an opportunity to buy a home you had your eye on. Free services like Credit Karma allow you to check your credit score and verify the accounts on your credit report.
4. Failing to account for the extra expenses that come with buying a home.
Your mortgage isn’t the only expense you’ll be adjusting in your budget. To avoid sticker shock, remember to add in the hidden costs.
Here are a few of the expenses you might not have considered:
- Property taxes
- Home insurance
- Utilities (These can vary significantly between houses.)
5. Buying a house you can’t afford because you’ve fallen in love with it.
Even if the house has the perfect built-in shelving for your library or the pool you picture on the brightest summer days, don’t buy a house you can’t afford. It’s tempting; we know. But, paying for a mortgage that doesn’t fit into your budget will have you stretched thin for years.
6. Not using a realtor.
Technology continues to make us more independent. We begin to feel like we never need middlemen because they create additional costs. But, the same isn’t true for a realtor.
A professional will help you find the home that fits your specifications as closely as possible. They’ll also use a multiple listing service (MLS) to see the most current selection of homes in your area and help you negotiate a competitive price.
A realtor is your ally in the home-buying process and will be there to answer any questions you have along the way.
7. Skipping the home inspection.
You can’t put a price on peace of mind. Well, if the inspection were thousands of dollars, maybe you could put a price on it. But, an inspection costs $315 on average. For just a few hundred dollars, you can avoid potential big-ticket replacements and repairs.
8. Shopping without a vision for the future.
Buying a house isn’t a face-value event. Picture what the house could look like with a few minor touch-ups. Think also about the direction of the neighborhood. Is the value consistently increasing? Compare the house with others on the block to see how this one measures up, and understand the trends of the area. Your house is an investment, so make sure it’s a wise one.
9. Changing your financial situation between loan approval and closing.
Once you’re approved for your mortgage, lay low. Buying big-ticket items (e.g., a car) will change your credit statement dramatically enough that you may no longer qualify for your loan. Hold off on purchasing too much on credit until the process is final. It will also give you time to see how the mortgage and new expenses fit into your budget.
10. Not being realistic about how much time and money you’ll invest in the house later.
In the fantasy world we sometimes live in, we have lots of free time and are always motivated to search YouTube for DIY projects. Be realistic about your time constraints and capabilities before buying a house that needs a little too much TLC. Choose a house that will be comfortable to live in before any renovations are complete unless you’re confident that it’s a task you’re ready to undertake.
Home-buying doesn’t have to be a fish-out-of-water experience, even if it’s your very first time. Your financial advisor can give you informed advice to help you make the best possible choices for your current and future financial goals.
Southwestern Investment Group takes a holistic approach to your finances. We understand your needs and create a personalized strategy that works for you while always keeping your best interests as our top priority.
Contact Southwestern Investment Group today to learn more about how we can assist you with the home-buying process.
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