So, you’re looking to buy your first home. It can be nerve-racking looking through all the listings, getting loans and insurance, and taking one of your biggest financial moves to date. Make this adventure we call home-buying easier by avoiding these seven mistakes.
Deciding the first house you tour is “The One”
Going on that first tour of a house can be exhilarating, and looking at the house through rose-tinted glasses can make you miss things that could be wrong with it. Remember: slow down, shop around, and don’t jump the gun in your excitement. It’s always a good idea to take a trusted friend or relative along for a home tour, as they’ll often see things you might miss and ask questions that would otherwise be forgotten.
Negotiating can be intimidating, especially for such a large investment and with little to no experience. Don’t get cornered into paying more than what the house is worth, and negotiate the price down to what is both in your range and what is acceptable to the seller.
Starting negotiations too low
On the other end of the spectrum, don’t low-ball during negotiations, either. You risk offending the seller and having them walk away from negotiations if your offer is too low. Offer a fair amount, and work towards a price you are both comfortable with.
Not hiring a home inspector
Buying a home is a huge investment, and the last thing you want is to be stuck with a loan for a house with major issues. A certified home inspector can save you major dollars by finding things the seller didn’t fill you in on before you’ve already bought the house. You most likely aren’t an expert, so trust someone who is to ensure you aren’t missing anything.
Setting an unrealistic price range
Set a budget, and stick to it. Take into account your income, taxes, insurance, renovations, closing costs, and interest. Don’t take out a loan you can’t afford, and make sure the monthly payments are manageable—preferably no more than 30% of your income. Banks will always help you determine what kind of buying power you have as well, and assist you in figuring out what your best debt-income ratio would be for your new mortgage.
Expecting to find the perfect house
You may have an image in your head of exactly what your house should look like, how many bedrooms and bathrooms there will be, the location, the price, and a million other things. It’s important to manage your expectations and realize that no house is perfect, and if you expect to find your dream house you may end up looking for a long time. Find the right house for you, but don’t expect it to be perfect. Find the house with the right “bones” and know that things like color scheme, cabinets, and flooring are all aesthetic and can be changed.
Not getting pre-approved for loan
Pre-approval is an important step for any home buyer. Getting pre-approved for a loan gives you the peace of mind of knowing you can get a loan, exactly how high of a loan you can get, and can help set the budget for your search. Don’t forget to consider the closing costs when comparing the pre-approved amount and the price of the house you are looking at. If you’re going through a realtor or broker, they can be your best friend for this process. Typically, they have a good idea of how low or high the seller is willing to go. They also know what kind of interest the home has. How many people are also looking at it? Are there any outstanding offers? We at TSB are also available to help you with any home loan needs and questions!
Good luck, and happy hunting!
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