You must be fed up with paying rent for a small apartment and decided to look for new houses to buy one. Well, that is a huge step and improvement in your life. It is better than spending your money on expensive shopping and purchases from Adidas and other expensive stores for no reason.
If you take one more look at your weekly expense tracker, you will notice that you spend more than you should on useless things. Online shopping fashion seems to be capable of tempting and attracting fashion lovers and money spenders.
That is why buying a house is a remarkably mature and wise act. But if you do not want to be one of those quick homebuyers who would regret their decision later, read to know what to do.
Before you start looking for any home to buy, check your money saving envelopes or saving account which can help you decide whether you can bear the expenses of a new home. Unfortunately, most people do not think this way when they decide to buy a house.
Accordingly, they commit dumb mistakes that may cost them a fortune, but you do not have to be one of them. Here is a list of 7 stupid mistakes you could commit and should avoid when making your mind about buying a new house.
1. IGNORING THE CREDIT SCORE
The best money-saving strategy is having a saving account or a regular account where you will keep raising your credit score. A lot of buyers ignore their credit score which can be the number one requirement to get a home loan or mortgage.
Usually, the philosophy of lenders is based on preserving the best interest rates for house buyers whose credit score is great. This is a way to ensure that you can pay back fully the loan money.
If your credit score does not exceed 600s, lenders become very worried about the possibility of having you disclaimed paying off the loan. It must be noted that the amount of money you take initially as a loan is not what you pay off.
You will be charged for more through a high-interest rate. For instance, if you buy a house for 300.000 dollars and 50.000 is a down payment, the fixed interest of 4 percent for a 30-year-mortgage will result in paying off 179.000 over the term of the loan.
Before you begin looking for a house, check your credit score through a credit report online which would reveal whether you can or cannot afford a house. You can even hire a company credit check services to do the whole thing for you in case you are busy. In case your credit score is that low to not get a loan, you’d better start boosting it.
2. FAILURE IN GETTING A PRE-APPROVAL FOR A HOUSE LOAN
You must be envying US veterans for getting the best VA home loan lenders, right? You can benefit from a good loan to buy the house of your dreams as well if you get everything done right.
The procedures of first time home buyer prequalification are different from those related to being preapproved. The confusion between the two terms may arise for people tend to utilize them interchangeably. Preapproval includes having the best home loan lenders examined your situation financially.
At the end of the examination, you can have an idea about the figure, money; you can take as a loan from the lenders. The prequalification of home buyer is, however, a bit different. It includes a simple review of your means to draw an estimate.
If you are lucky enough, you may benefit from an edge thanks to the preapproval, especially if several persons placed their offers regarding the same property.
3. GETTING THE WRONG LOAN
This requires a bit of strategic planning and careful examination of your credit and budget. It is hard sometimes to decide which bank has the best home equity line of credit, still, this does not mean that you will go straight to buy the house.
You need to understand and realize how much you can afford and not what is said you can afford. You should know that the bank-approved limit may result in stretching your finance, and worse, in a big financial crisis in case you lost your job or got injured.
When you are out looking for a house, think strategically; take 10% of the bank-approved limit or amount to save it as your maximum house price. Remember that adjustable-rate and interest-only mortgages are the kind of loans to be avoided. Many individuals think that these are the perfect types of loans, whereas they are not.
These loans start usually with low payments, but the interest rate might change later on. Your payment will become unbelievably sky-high. For security and peace of mind, do not opt for an online mortgage or an interest-only mortgage. Pick safer choices like a fixed-rate mortgage.
4. NOT USING A HOUSE AGENT
Here is a tip before going house hunting: never go alone! Throughout the home buying process, get the assistance of a home agent. Agents for home buyers can be such a blessing thing, especially if they are trustworthy and good.
They can take you to the fanciest properties in the estate market and make the buying process smooth. They can also play the role of a mediator by introducing you to qualified inspectors and lenders. Buying a house is a huge purchase.
That is why you need the assistance of a professional to escort you throughout the whole process. If you cannot afford an agent, you can hire the services of a real estate lawyer who can help in the preparing of the necessary paperwork before you sign anything at all.
5. BUYING BASED ON EMOTIONS
There are times in life where emotions should be put aside. Emotions may beat reason sometimes, but reason should conquer all the time. This is an applicable rule to everything in life. Always be moderate and let your heart and mind work out things together.
Another mistake that many homebuyers commit is purchasing a house based on emotions. If you love the house you want to buy, then that is fantastic, but check your planned budget, Can you afford it?
With the new house, you love comes a lot of future costs and expenses that you cannot disclaim once you affix your signature on the dotted lines. Think twice before purchasing anything you cannot afford.
There are many things to be considered inclusive of the expenses of the pool maintaining, lawn mowing; plus homeowners association will demand full loyalty and payment of the fees annually.
So why don’t you save yourself from all this trouble and buy the house you can afford in the first place? To rationalize your decision, ask yourself the following questions:
- Am I capable of affording this house inclusive of the taxes?
- Am I capable of maintaining, heating and cooling the present house?
- Do I have the ability to pay for renovations when needed?
- Regarding the rooms and layout, is it exactly suitable for my family?
6. INSPECTION SKIPPING
Before making up your mind and decision, you need to inspect the house. It does not matter whether you are purchasing a newly constructed home or an ancient, historic mansion, inspection is a must. Trusting your gut is the best thing, but in such cases, you need a second opinion.
A professional person can help in revealing any safety threats, structural damage or code violations. Schedule a day or two to go on an inspection journey through the house in the company of an inspector to detect any potential problems.
The inspection process might delay the purchase, but it is worth it to know at least whether to proceed or drop the whole thing. This is much better than finding out after the finalization of the sale that the house has got something dangerously wrong.
7. NO BACKUP PLAN
Back to strategic planning, right? Many people seem to barge in things and deals they cannot complete for they either had zero plan or had no backup plan. Whenever you are about to do anything, have a clear plan in your head to be the first thing to resort to.
In case the initial plan does not work, use plan B. In case the inspection you had gone through and the detection results of the professional inspector unveiled many flaws in the house, what will you do? Do you have a plan B?
If you are attentive enough, you would avoid mistake n°4 and get an agent. The role of the agent revolves here around including a clause in your offer which states clearly that you can have any deposit back in case the inspection did not go as good as expected.
One more thing, you need to draw a backup plan in case the house does not level up to your expectations. This is also useful in case the funding you are expecting to be provided with by a loan program does not take place.
Buying a house is a decision that many among you had to take at a certain point, so tell us about how you managed to buy a new house without wasting your fortune. If there are any further tips to keep in mind before setting about such a major purchase, feel free to include it in a comment.