Of all the investments you’ll make in your lifetime, your home is likely your biggest one. Therefore, it’s important to take the home-buying process seriously, as any mistakes you make during the process could have a magnified effect. If you know what types of mistakes to be on the lookout for, you’ll be better prepared to avoid them so that you can enjoy smooth sailing as you move into your first home.
Taking On Excessive Debt
Some people see moving into a new house as a chance to have an entirely new start. To achieve this, they buy a new car before moving on to purchase a new home. Unfortunately, this could cause a red flag for your lender, which could prevent you from being approved for a mortgage. Try to keep your debt levels as low as possible until you’ve been approved for a mortgage, and then it is best to continue to keep your debt as low as possible until you can experience your new mortgage debt level for several months before taking on any additional debt.
Not Getting a Pre-Approval
In a false sense of haste, some people skip the pre-approval process and move directly to the home search. However, this can have dire consequences down the road. Without a pre-approval in hand, you may be passed over for certain homes or may find out later that you don’t actually qualify for mortgage loans based on your financial history or income. Therefore, don’t skip the pre-approval process, even if it delays your home search by a few days.
Maxing-Out Your Budget
Once you do receive pre-approval for a mortgage, it’s not a measure of the exact amount you should spend. In other words, you shouldn’t be looking for homes at the top end of the amount that you’re approved for. Instead, look for homes that are a few thousand dollars under the maximum approved amount so that your monthly mortgage payments are more manageable as you move forward.
Avoiding a Real Estate Agent
Some intrepid first-time homebuyers think that the process will be simpler if they try to go it alone. However, trying to buy a home without a realtor could cost you dearly. Given a realtor’s experience when it comes to reading the fine print of a contract for a home, they could save you from making a major financial mistake that you would regret for years. State laws vary but generally, the listing agent works for the Seller, so you should be sure to have your own agent who is supposed to have your interests at heart. But of course, they still want to make a sale and so they may try to get you to settle for less than your best. Be sure to ask them if they are a “buyer’s agent” or “seller’s agent” to determine if they will have your best interests at heart.
In general, one of the worst things you can do when buying your first home is to get in a hurry. Although the thrill of buying a home can cause you to try and speed things up, there’s no substitute for taking your time to ensure that everything works out in your favor. Given that this decision could change your life for decades to come, it’s important to take things seriously.
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