If you’re thinking about buying your first home, you probably can’t wait to take the plunge and begin looking at houses. But, before you dive in and search for homes to view, you should consider a few things first.
First-time house hunters often make mistakes that can make the entire process more lengthy and frustrating than it needs to be.
Here are four of the most common mistakes new buyers make and how you can avoid them.
Not Getting Pre-Approval
To avoid setting yourself up for disappointment, don’t begin shopping for a home before you know how much you will be able to borrow.
Before you even begin looking at listings, get a pre-approval for a mortgage from your lender so that you know how much you qualify for. Getting your mortgage pre-approved before you become attached to a house you can’t afford will ensure that you make a financially sound decision rather than an emotional one.
Confusing Pre-Qualification With Pre-Approval
Although a mortgage pre-approval and a mortgage pre-qualification may seem similar, don’t confuse the two.
First-time home buyers often fail to see an essential distinction between pre-approval and pre-qualification, which leaves them feeling extremely frustrated during the house-hunting process.
A Pre-qualification on a mortgage is only the first step in the application process – it means that you have provided your personal and financial information to a lender, who has then given you an estimate on the mortgage you may qualify for.
The mortgage pre-approval process is much more rigorous than the pre-qualification process – the lender will scrutinize your financial information, determine your risk, calculate your monthly payment, and give you the exact figure of what you can borrow to purchase your new home.
If you are shopping for a home while your application for a mortgage is only in the pre-qualified phase, you may be in for a nasty surprise if the actual amount you are approved for is less than the estimate.
Getting Distracted By Staging
A knowledgeable or experienced seller will employ professional tricks of the trade when it comes to attracting buyers. This usually means they will deep-clean their house, manicure the yard, and depersonalize it as much as possible so that it appeals to a large variety of buyers.
Some sellers, however, will hire professional home stagers to make the house seem more appealing – from hanging beautiful drapes and bringing in different furniture to making small rooms appear bigger to hide the house’s imperfections with strategically-placed carpets and wall hangings.
Professional house stagers are experts at adding layers to home to detract from its flaws, so make sure you make a decision with your head, not your heart. After all, the staged furniture and extra touches won’t be there when you move in.
Not Determining What You Can Realistically Afford
It may come as a surprise, but the amount you are approved for on your mortgage and what you can afford can be very different.
Although your lender may have signed off on a pre-approval for a $500,000 loan for a house, they do not have other insights into your financials – such as your retirement or kid’s college fund goals. If you decide to take a large mortgage, you may end up jeopardizing your long-term financial security.
Besides the mortgage repayments, there are other costs that come with owning a house that you should consider – for instance, utility bills or unforeseen repairs and maintenance.
Before you even begin looking at listings, you need to have a good idea about what you can afford so that you don’t find yourself in financial trouble later on.