The Worst Home Buyer Mistakes Not to Make
Sometimes you learn lessons from other people's mistakes. (Well, if you're wise you do.) To help you make your home buying experience the best it can be, we're talking abou the most commonly made mistakes home buyers can make. These are definitely things you don't want to do! We'll also help guide you on what to do instead. Here at Century 21 Action Topsail, we want to be your Topsail Island realty resource for everything you need to know. We aim to please and want to let our expertise and experience work for you, so if you need guidance or assistance—please reach out and contact us.
AVOID THESE MOST COMMONLY MADE HOME BUYING MISTAKES
House Before Mortgage
Oftentimes, enthusiastic home buyers start looking at houses before ever talking to a mortgage lender. This puts you at a disadvantage in a competitive market and also wastes your time by potentially looking at houses that are not within your means. Pre-approval is a wise financial move!
More Than You Can Afford
Overextending yourself can lead to regret and put you in financial risk of losing your home during tough times. Focus on what monthly payment you can afford rather than fixating on the maximum loan amount you qualify for. Just because you can qualify for a specific amount doesn’t mean you can afford the monthly payments that come with it.
One Lender Only
Speaking of lenders, you don't want to limit your options or rush through the process by only talking to one lender. Like any other big purchase, it's smart to comparison shop. Shop around with at least three different lenders, as well as a mortgage broker. Compare rates, lender fees and loan terms.
Moving Too Quickly
One of the most common mistakes home buyers make is not planning far enough ahead for this milestone purchase. Map out your home-buying timeline at least a year in advance. Work on boosting your credit score, paying down debt and saving more money to put you in a stronger position to get pre-approved.
Emptying Your Savings
According to the experts, spending all or most of your savings on the down payment and closing costs is one of the biggest mistakes homebuyers make. Homebuyers who put 20% down don’t have to pay for mortgage insurance. That’s substantial savings on the monthly payment, but it’s not always worth the risk if you're living on the edge. Aim for having 3-6 months of living expenses in an emergency fund. Paying mortgage insurance isn’t ideal, but depleting your emergency or retirement savings to make a large down payment is riskier.
Emotion-Based Decision Making
Ah, this one is a hard one sometimes. Buying a house is a big deal! Of course you're going to feel strong emotions with this momentous occasion—as you should. Just be careful not to let them dictate your decision-making or override your common sense. Remember that this is also one of the largest financial investments you can make. Have a budget and stick with it, and don't become emotionally attached to a house that isn't yours.
Here's a lesson that buyers sometimes learn the hard way: Lenders pull credit reports at pre-approval to make sure things check out and again just before closing. They want to make sure nothing has changed in your financial picture. Any new loans or credit card accounts on your credit report can jeopardize the closing. Don’t open new credit cards, close existing accounts, take out new loans or make large purchases on existing credit accounts in the months leading up to applying for a mortgage through closing day.
House Over Neighborhood
Don't be short-sighted! You may find the house of your dreams but have you looked into the neighborhood and made sure it's a good fit for you? Ask your real estate agent to help you find the neighborhood crime stats and school ratings. Measure the drive from the neighborhood to your job. Visit the neighborhood at different times to get a sense of traffic, neighbor interactions and the overall vibe to see if it’s the right place for you.
Not Counting the Costs
Don't underestimate or miscalculate the hidden costs of home ownership, which doesn't end at the monthly mortgage payments. As a homeowner, you’ll pay for property taxes, mortgage insurance, homeowners insurance, hazard insurance, repairs, maintenance and utilities so you have to be informed and prepared for these costs. Crunch the numbers on taxes, mortgage insurance and utility bills. Shop around for insurance coverage. Aim to set aside at least 1-3% of the home’s purchase price annually for repairs and maintenance expenses.
You may assume that you need a 20% downpayment to even attempt to buy a home. Not true. While a 20% down payment does help you avoid paying private mortgage insurance, many buyers today don’t want (or can’t) put down that much money. In fact, the median down payment on a home is 13%, according to the National Association of Realtors. You can put as little as 3% down for a conventional mortgage (note: you’ll pay mortgage insurance). Some government-insured loans require 3.5% down or zero down, in some cases. Plus, check with your local or state housing programs to see if you qualify for housing assistance programs.
The concept of homebuyer rebates, also known as commission rebates, is something worth knowing about and negotiating for if you're a home buyer. This is a rebate of up to 1% of the home’s sales price, and it comes out of the buyer agent’s commission. Homebuyer rebates are available in most U.S. states, but not all. If you live in a state that allows homebuyer rebates (North Carolina does), see if your agent is willing to provide this rebate at closing. On a $300,000 home purchase, this can be a $3,000 savings for you so it’s worth asking.
Not Seeking Real Estate Advice
Buying a home can be tricky business, especially if you're unfamiliar with the ever-changing process and procedures. Don't go it alone! It's important to choose local professionals who can help you navigate the ebb and flow of the real estate market. Mistakes can be costly and you don't want to learn the hard way. Century 21 Action Topsail has a lot of experience and some of the best real estate professionals ready and waiting to help you buy a home. Take advantage of what we have to offer and benefit from our local experience and years of professional service. How can we help you? We're here for you and would be honored to be your Topsail Island realty service.
“If I were asked to name the chief benefit of the house, I should say: the house shelters daydreaming, the house protects the dreamer, the house allows one to dream in peace.”— Gaston Bachelard
WHAT HOME BUYING TIPS DO YOU HAVE?
We want to know! Our comment section is open and we'd love to hear from you.