There are lots of common mistakes that buyers make before purchasing a home. They can be easily avoided – but only if you know about them before you commit them! This list should help keep you on the path to owning your dream home.
1: Not checking your credit report and score
You may think why bother? The lender will tell me what my score is. But it’s worth looking into first before anything else. Turns out there is an excellent chance that there is an error on your report! Several years ago, one study found that more than 79% of all reports had some sort of error, and nearly 25% of those errors were extremely damaging. If you catch an error, you can fix it before you fall in love with a house!
2: Not using professional help
Getting a contract to move from the initial offer to the closing table includes dozens of steps along the way. An excellent Real Estate Agent will help you through the entire process, from the initial search to the final signatures. However, it takes a full team to make a closing happen! Real Estate Agents will help you connect with lenders, closers and title companies, inspectors and contractors, and other contacts you may need during the transaction. Not only will they help you get in contact with those people, but they’ll also help you understand the process as a whole, and make sure that everything runs as smoothly as possible.
3: Not getting pre-approved
Sellers have a lot to sort through on their end as well. Put yourself in their shoes and imagine if you were looking at an offer from someone on your house and they didn’t have a pre-approval letter. Would you trust this person to magically come up with the funds to purchase the home? Not only will sellers expect a pre-approval letter, but it’s also for your benefit. It means you’ll know upfront exactly what you can afford, so you don’t even bother looking at houses that are beyond your price range.
4: Not creating a long-term budget
It’s very exciting to get pre-approved and to see a big number in front of you that a lender says you can afford. Think about where you spend your money, however. Are you factoring in gifts you purchase for others, nights out, vacations, clothes, and your daily coffee purchase? Remember that with homeownership, now instead of a landlord who will fix issues, YOU are responsible for inevitable repairs or upgrades. That should be factored into your budget as well!
5: Thinking you’ll get everything on your “wish list”
Sit down with your Real Estate Agent and make a needs/wants list. Needs are the “deal breakers” – and you shouldn’t have more than 2 or 3 of these. Wants are just that—icing on the cake, but not necessities. The odds of finding a home that has everything on your list are very small! Reign in your expectations and have some flexibility, and you’ll find the process of home searching far more enjoyable.
6: Not considering the resale value of the home
Ok, so you haven’t even put an offer on something yet–you’re definitely not thinking about selling it again! But you really should. Even if you feel like this is your “forever home,” life happens. Jobs relocate, illnesses happen, neighborhoods change, and your family’s needs can change—all are reasons to keep the resale value of a home in mind. Real estate is an investment.
7: Not researching the neighborhood
Make sure that you feel safe in the neighborhood, and if schools are a factor for you, make sure the house you buy is in a school district you’ll feel good about sending your kids to. Use local police websites to check on neighborhood crime, but keep in mind that every neighborhood is going to have crime reports—the question is what type of crime. Car break-ins are common, even in the most expensive areas, but violent crime is a different matter altogether.
8: Changing jobs/making huge purchases before closing
Doing anything after being approved by a lender, and before closing on a house is a huge no-no. Lenders have to have your information as stable as possible to get the loan through underwriting, and if you switch jobs two days after writing an offer, or you buy a car or new furniture the day before closing, you are seriously jeopardizing (or perhaps outright destroying) your chances of closing on the house. Your credit needs to be the same if not better than it was when you were pre-approved.
