Now, we’ve talked about mistakes home sellers make when putting their home on the market. But what about buyers? You may be considering purchasing a home for the first time and thus home selling tips aren’t super helpful. What are 5 mistakes that home buyers make when getting ready to buy a house? Not getting pre-qualified (or applying for a loan) before starting the search.
5 Mistakes Home Buyers Make
1. Not getting pre-qualified (or applying for a loan) before starting the search
One of the most common mistakes home buyers making is looking at homes before getting approved for a loan. There are 2 problems with this.
First it can take a couple of days to get approved. If you fall in love with a house and want to put an offer in, it could easily get snatched up before you get approved for a loan.
Second, you may end up setting your sights on houses that are out of your price range.
If you know what you’re qualified for beforehand, your less likely to get your hopes up and have them dashed when someone else puts and offer in sooner or a house end up being out of your price range.
Before you start looking at homes, be sure to get pre-qualified and start the loan approval process. If you’re not sure where to find the best lender, talk to your real estate agent. They can likely recommend a good one as they’ve probably worked with many different lenders.
2. Talking to only 1 Lender
Another mistake home buyers often make is talking to only one lender. You may have found a lender that promises to give you the best deal online. But, how do you know their giving you the best deal if you don’t know what others offer.
Shop around. Take a look at what local lenders and banks have to offer. Most likely a loan officer working for a lending company will be able to give you more options and a better deal than most banks.
Some lenders price match. So, if you find a good deal with one company, find out if other companies price match and work with the best company.
If you don’t take the opportunity to talk to multiple lenders, you may be leaving money on the table that could otherwise go towards closing costs or remain in your pocket.
3. Buying more than you can afford
People often say their eyes were bigger than their stomach when it comes to eating. When it comes to buying a house, people’s eyes are often bigger than their budget.
Regardless of what you qualify for on paper, it’s important to consider how a mortgage payment fits into your budget. Discuss your budget with your lender and they can recommend a loan amount based on the highest monthly payment you want.
You may qualify for a $300,000 loan, but you may not want to pay $1,800 a month on your mortgage. Set a goal for what you want to pay monthly and then discuss your qualifications with a lender.
Base your max home price on what you can afford rather than on what you’re able to qualify for.
4. Moving too Fast
Buying a home is exciting, but it’s also one of the biggest purchasing decisions you’ll make in your lifetime. Once you start looking for homes, it’s easy to get your sights set on what you think is your dream home and jump in head first. Moving too fast however, can be a big problem for home buyers.
First of all, you may need time to save up a down payment or set money aside for closing costs. If you have issues with your credit, moving too fast won’t give you time to address them before attempting to get a loan.
When you take your time, you are also able to make a more informed decision on your home purchase. It can be tempting when the market is hot to rush into things thinking that if you don’t right an offer now, you’re not going to get a home. But as you take time to look at homes, you’ll gain a better understanding of the market and be able to make a more informed decision when it comes time to right an offer.
5. Draining your entire Savings
The biggest mistake home buyers tend to make is draining their entire savings to cover the down payment and closing costs.
It’s important to be careful with your savings in order to ensure that you can pay the bills to follow. It’s recommended to keep at least 3-6 months worth of living expenses in your savings as an emergency fund. Depleting this to buy a house could cause major problems if something comes up.
Be careful with your money. Even though a home is a good investment, it isn’t wise to drain your savings for it. Take your time and save up a down payment while still maintaining an emergency fund.
If you’re considering buying a home in the near future, we hope this article will help you to avoid these 5 mistakes home buyers make.