Top Homebuyer Mistakes
Not Being Pre-Approved First
The key is to get preapproved and not just pre-qualified. What this does is it gets the loan officers system to say ‘yes’, ‘no’ or ‘yes with conditions’ on what you will be able to do. This is a key distinction as getting prequalified requires very little information from the borrower but pre-approval requires a lot of the heavy lifting with paperwork being handled up front. The pre-approval letter is a much stronger document to have on hand when making an offer on a property as it lets the Seller know you have already done most of the legwork required to get a loan secured for the price you can afford.
Not Accounting for all Required Costs
Sometimes borrowers get so caught up in the down payment that they forget there are other costs involved. From closing costs to home insurance to touch-ups, the house may need if not new or fully remodeled to moving expenses to furniture, there are numerous things that can come up as ‘gotchas’ that you hadn’t thought of. Ensure you account for these items when buying a home so you know you are covered. If you can’t have everything you want at the time of purchase, you can at least have a plan on how to fill in any gaps over time.
Not Having the Budget for Home Ownership
Even new homes require money to be spent on them. Whether decorating or maintenance, every home tends to receive both so you’ll want to budget accordingly. There is an abundance of resources online on how to plan accordingly for these types of items.
Being Too Rigid
Your home is a very important purchase, oftentimes the most expensive thing you will ever buy. However, even with homebuying, flexibility is important. Oftentimes it’s very difficult to find a home that ‘has it all.’ This is simply because either the house doesn’t have every option you want, is out of financial reach or perhaps is not in the ‘perfect’ location. Be willing to adapt and know that if a home doesn’t have everything last detail you expected, it oftentimes can be enhanced over time to fulfill any remaining wishes. Prioritize your ‘must haves,’ give a hard look at a home that gets you those as closely as possible and then adapt accordingly. More than likely, you’ll be very satisfied.
Failing to Hire a Professional Inspector in the Residential Space
In particular when buying a remodeled home, having a home inspector review the home is of immense value as long as you hire a quality inspector. Quality inspectors inspect the home with a high level of detail. They do not wear the hats of other trades without the proper skills and licenses in place. They also document their work well. Ask to see samples of their work. You’ll likely find if you compare a few reports that the quality of work varies significantly. You want to ensure you hire someone that is looking out for your best interests fairly and knowledgeably. You also want to ensure they are professional, courteous and detailed as oftentimes their work will be scrutinized intensely to ensure what they state is an issue really is an issue. Their ability to work with remodelers and builders in a constructive fashion is key.
Using all of Your Savings for the Down Payment and Failing to Budget for Anything Else
Using savings for a down payment is a common thought process for saving for the first home. This is certainly a viable way to come up with a down payment but we suggest you not use all of your savings. Being a homeowner requires money. Homes do require maintenance and/or replacement of items over time. Common examples are light bulbs, air filters and yard maintenance. While small items, each requires capital in some form or fashion to keep your new home up. Budgeting for these in advance will help you enjoy your home experience to the maximum.
Buying Anything Requiring a Credit Check Before Closing
The idea of putting a shiny new car in a new home is very exciting to think about. Just wait till after closing on your home to get the car. Making a car purchase requires a credit check and we advise you get no additional credit checks during your time of obtaining a mortgage. We have seen simple credit checks derail entire transactions even for minimal amounts because you couldn’t resist the urge of a store card sale. Resist it so the bank rewards you with the mortgage you seek. Close the home and then you can get back to the rest of your life with a new home in hand!
Not Using Care in Taking on Television-Inspired Renovations
We admit it, we like TV shows too! But keep in mind they are first and foremost, entertainment. Easily 95%+ of what goes into successful home renovations is not shown on TV. There is a lot to this business and in many cases, it is best left to leave home renovations to the pros. There is no shortage of stories of people who ‘tried’ home renovation only to lose thousands, if not tens or even hundreds of thousands for a job gone astray. If you choose to make renovations on as part of your home purchase as provided by some loan products, be very selective of who you hire with razor-sharp bids based on easily verifiable reality. Your bank account and peace of mind are worth the extra effort.