If you’re not careful its easy to make many mistakes when buying a house. But many of these mistakes can be avoided with some simple planning.
There are a lot of factors that you, as a home buyer, will not be able to control, such as the home inspector’s findings, seller’s actions and the bank’s decision-making process. However, other factors can be squarely under your control, and making sure you avoid crucial mistakes when buying a house can make your life easier, both now and in the future. Save time and money, and avoid stress, by staying away from these blunders:
- Failure to Get a Pre-Approved Mortgage
One of the big mistakes when buying a house that many people fall into the trap of doing. As most home buyers would do, you would borrow money for a home loan, but make sure you talk with a loan officer. You’ll be required to provide some proof of income, credit card and other loans. He will then come up with an amount that you are qualified to borrow and required to pay back in monthly instalments. Now, the amount of monthly instalments should include the actual mortgage payment, which is principal and interest, added with home insurance and estimated property taxes. It is only then that you will know whether the suggested amount is reasonable enough or high depending on your financial capacity.
- Underestimating Insurance Costs and Required Coverage
In some cases, what home insurance covers is not what you think it is, so you should read your policy carefully. Typically, it should cover theft, damage caused by weather conditions and damage due to explosions, such as that from a leaky gas line. Flood damage would not be included in a standard policy, so you may need an additional policy for such events.
- Disregarding Home Inspection
Property inspections can uncover problems with the structural components of a home, and in some cases, inspectors would check for evidence of mould and pests. This means that you should take note of such a requirement before you buy a home.
- Failure to Know Your Credit Score
Before you pursue with buying a home, check your credit score first. A credit score that is almost excellent allows you to apply for a conventional home loan. Typically, a higher credit score will offer you lower interest rates, though other factors, such as the amount of down payment, are also important.
- Inability to Request Contingencies
When signing a sales contract, you (as the buyer) would have to put down “earnest money”, which is a way to assure the seller you are a committed buyer. This means he will be comfortable with taking his house off of the market, while waiting for you to close your loan. At closing, you can also use the “earnest money” on helping to fund your down payments or closing costs.
- Failure to Hire A Solicitor
Having a real estate solicitor is a wise defence against making an expensive purchase, even such a professional is not required in your area. While his objective advice can be invaluable, he should just charge you a flat fee for any real estate transaction you complete with him, unlike those who have a vested interest in closing a deal.
- Buying a Car While Buying a Home
A big purchase, like a car, can eat a significant portion of your total available credit, which would make you disqualified for the mortgage amount you were initially approved. It can also pull your credit score down when opening a new credit account.
To make sure you don’t make these mistakes when buying a house, always work with an expert when buying a home.