It is an exciting time when you are shopping for your first home. You start dreaming of all the things you’d like to have in a house and viewing online tours. It’s okay for your head to be in the clouds as long as your feet are planted firmly on the ground. Dream about the perfect home, but be careful that you don’t make these rookie mistakes.
1. Skipping Pre-approval
Before you start house-hunting, take the time to find out how much you will be approved for. It will give you a budget to work with and save time later when you find the perfect home. If you do the pre-approval process after you find a home, you may end up losing it to someone who is already pre-approved.
There is a difference between getting pre-approved and pre-qualified. With pre-qualification, you have given basic information to the lender so they can determine how much you can qualify for. However, you are not guaranteed to get that amount. With pre-approval, the lender goes through the entire process and guarantees you a loan for a certain period of time.
2. Not Knowing What You Can Afford
You may have been approved for a certain amount, however, to be able to afford those mortgage payments you must sit down with your budget and figure how much money you need to allocate each month. If you are already paying rent, you know you can pay at least that much. But if you want a bigger house, or one that’s in an expensive neighborhood, your mortgage payments can be more than your current rent. Don’t get locked into a loan without knowing where the money is coming from.
3. Not Knowing the Value of the House
A seller may owe a certain amount on a house or expect a certain sale price, but it may not be the right price in today’s economy. House values have fallen in the last few years and will take some time to rise again. Don’t end up paying more for a house than it is worth; you may run into problems if you decide to sell.
4. Not Getting the Right Inspector
Don’t get so excited about a house that you skip the inspection or choose a cheap inspector to do the work. Even beautiful homes can have unseen damages or expensive problems which may need repair. Mold often hides in hard-to-find remote areas, and structural damage can take years to affect the part of the house you see.
Not all problems mean that you should back away from the home. What it does mean is that you should try to negotiate a lower price or have the seller fix these problems. You don’t want to end up hating a house that looked so good in the beginning.
For many people, buying a home is a dream. Don’t let it become a nightmare by making these costly mistakes. Take the time to learn about the buying process and stay a step ahead.