Home Buying Mistakes to Avoid
7 Mistakes to Avoid when Buying a Home
So you're thinking about buying a home? That's great. You may have even received lots of helpful advice from friends and family members about what you should do. That's great, too. But while getting guidance on what you can do to make the process easier is important, it's equally important to understand what not to do. Here are 7 home buying pitfalls you must avoid:
- Not doing your research. Buying a home may very well be the biggest financial decision you will make in your lifetime. That's why it's so important to do your research before you even start home shopping. Your research should include home prices and values, neighborhoods, and schools. Remember, you're not just buying a home; you're buying the neighborhood, too.
- Spending more than you can afford. When you start shopping for homes, you may be tempted to spend more to get all the features you want. However, that may end up giving you a monthly payment that keeps you up at night. The key is to set a budget and stick to it, no matter how tempting it might be to spend more.
- Not getting pre-approved. It's always a good idea to get a pre-approval from a lender before you start shopping for a home. In a seller's market, a pre-approval can actually give you a valuable negotiating edge, letting a potential seller know you are a qualified buyer. When you're pre-approved, the lender will have reviewed your application, verified your income, and obtained your credit report, which can help expedite the process of buying a home when you have an accepted offer.
- Waiving the inspection. In competitive markets, buyers have been known to forgo home inspections to gain negotiating edges over other buyers. This is a serious mistake, as having a home inspection can help you uncover problems with the house that could end up costing you thousands of dollars.
- Underestimating home buying costs. When you buy a home, you may incur closing costs from the lender. You will also be responsible for paying property taxes and homeowner's insurance. Additionally, if you purchase a condominium, you will have to pay a monthly condo fee.
- Choosing the wrong lender. There are a lot of mortgage lenders and a lot of different rates. It's not always best to choose the lender with the lowest rate. It's a good idea to choose a lender you know and trust. Consider asking friends or family members for recommendations.
- Changing jobs. If you think you may be buying a home, it's a good idea to stay in the same job or industry until after you buy the home. Changing jobs during the approval process will require the lender to do another employment verification and could impact their decision to approve your loan.