5 Mistakes to Avoid When Buying a House
Whether you’re a first-time buyer or a repeat buyer, purchasing a home can be an emotional decision and there are many factors that can influence the choice you make. However, it’s important not to get too caught up in the stress of making this major financial decision and potentially make mistakes that could’ve been avoided. Thankfully, you can learn from these 5 common mistakes to avoid when buying a house, so that your home buying journey runs smoother.
1. Buying out of your price range
Often, those buying a home will gravitate towards homes that they simply cannot afford. It’s easy to get caught up in the look and feel of a home that is just out of your price range, and then try to figure out ways to make it work. This is a slippery slope to go down because before you know it, you could end up in a world of debt that you’re unable to dig your way out of.
How to avoid this: Make a realistic budget for what you can afford and stick to it. Work this out before you even begin looking at homes, that way you’re less inclined to make a rash decision based on your emotions.
2. Forgetting about mortgage pre-approval
This is a crucial step in your home buying journey, because what you think you can afford may differ from what lenders are prepared to lend you. If you aren’t pre-approved for a mortgage before you look for a home, you could be wasting everyone’s time if the lender approves an amount much less than what you’re expecting.
How to avoid this: Get mortgage pre-approval before you begin house hunting. Some financial providers or companies which offer real estate loans will give you a proof of funds letter which can help you walk into a real estate transaction confident that you have funding and can close on the home that you find.
3. Making a down payment that’s not big enough
Home buyers often make the smallest down payment that they can, without much thought to the monthly house payment thereafter. According to a survey done by Nerd Wallet, 1 in 9 homeowners under the age of 35 wish that they had waited a little longer and made a bigger down payment instead.
How to avoid this: The bigger the down payment, the smaller your monthly payments will be. So, work out your budget and then make sure that you save up enough for a down payment that will result in your monthly payments being a manageable amount.
4. Being swayed by the markets
Being influenced by the fluctuations of mortgage rates is a common mistake among home buyers. Low mortgage rates can be very attractive and cause people to make quick decisions to purchase a home, without thinking it through carefully. Naturally, this can lead to a huge financial burden.
How to avoid this: Before you look at buying a home, first consider whether you have enough money for a substantial down payment, as well as the monthly house payment. Work these out to see if they fit with your budget, and whether you can still live comfortably or if you’ll be extending yourself beyond your means.
5. Not considering additional costs
There’s more to buying a home than just the mortgage repayment and many home buyers don’t factor in all the additional costs that come with the purchase itself, as well as owning a home. Things like the gas bill, the cable bill and homeowner association fees are costs that need to be part of the decision. If you plan to renovate your home, this will also need to be factored in before you purchase it.
How to avoid this: Before buying a home, make a list of all the additional costs that could be incurred monthly and the once-off costs of purchasing a home, along with any renovation costs, to see if these fit into your budget. We hope that this guide of several mistakes to avoid when buying a house helped you!
