Typically, it is the buyers who make mistakes while going through the buying process. This is because they have mixed feelings when it comes to home purchase. In order to avoid getting involved in these frightful situations, you have to know about the intricate details of the real estate market.
Here are 8 common mistakes that each home buyer make:
1. No Specified Budget
Most buyers intentionally refuse to get a pre-approval process. This process involves him detailing the type of house he desires and taking the right steps to making a mortgage application. Instead of doing this, some home buyers feel reluctant because of their confidence in their resources and end up committing more errors. If you fail to prepare for making a mortgage application, you will get rejected and your credit score will likewise sink down. Besides, this rejection can be extended to all future applications that you make.
Given this, you have to prepare properly to ensure that you will get approved. Ascertain your budget and apply for this loan amount. In addition, try to improve your credit score until gets to about 700. If you are struggling toward the end of the month then expanding your surge an additional $250 a month is not a smart idea. You know your finances and budget better than anyone else, don’t make this mistake!
2. Be Realistic
It is not a necessity to make your first home your dream home. As a matter of fact, the majority of most home buyers purchase ones that are affordable and a little bit small. It may not be desirable at first but with time, you will get that dream home of yours. Don’t aim for luxury if you can’t afford it!
3. Going For a No-Cost Deal
It is only natural for one to be excited about purchasing a house. This is because they see it as an opportunity to get a no closing costs mortgage deal. However, they fail to realize that just because they are not yet paying these costs does not mean that there are no closing costs. These expenses are incorporated into the home loan and are incurred by the seller, the lender or someone else.
They can be either add to the interest (implies a higher interest) or the principle (implies higher cost of purchase). In any case, you will pay more in the long run. Therefore, you should go for a traditional approach and utilize your savings to take care of the closing costs.
4. Choosing Interest-Only Program
Perhaps, this is one of the biggest mortgage mistakes a buyer can make. It is awesome to have low monthly installments, yet at one point or the other, you will have to pay a lot of cash. Now, your basic option will be refinancing, yet you will be unfit to qualify for it since you wouldn’t have increased any value in your property because of the repayment of interest only. This will increase the risk of foreclosure. Try not to accept this risk for saving sake!
5. Not Making Down Payment
Buyers who fail to make a down payment will eventually have to pay a very high insurance premium. As a result of insufficient home equity, you may be unable to qualify for refinancing in the future. This can make the home loan repayment more expensive and much more difficult. A cheaper home loan will surely lead to a larger down payment.
6. Buying A Fixer
Practically every home will require some work. Works like landscape, flooring, broken ceiling, paint, and a lot of damaged items. Ensure that you set aside some cash for these things. You would prefer not to put this money on credit card in order not to increase your monthly expenses.
7. Lack Of Knowledge
Most buyers make this mistake a lot as they are uneducated about home buying. It is imperative that buyers educated themselves and learn about the transaction they are about to engage in. Regardless of the possibility that you have an agent to assist you, it is still important that you learn every step involved in the home buying procedure so you can be dynamic and will know each and every detail that happens to the house.
8. Failure To Consider The Resell
In the long run as your family and income expands you will need to purchase a bigger home in an improved neighborhood. When buying your first house consider how difficult the house will be if you were to sell in the future. For instance, manufactured homes are extremely difficult to finance, therefore it will be much more difficult to sell.
Buying another house can be an elating procedure. Only a few things on this planet can beat ones feeling of owning his/her own home. Take some time to understand the duties of owning a home and you will be prepared to have your own home without mistakes.
However, the home buying procedure can be quite complicated and delicate. If you have plans for this, make sure to outfit yourself with enough information and knowledge on the transaction. Endeavour to study even the tiniest detail in order to avoid these mistakes. Most times, ignorance make a man commit common mistakes. Therefore, be wise and avoid silly mistakes that most home buyers make.