Searching for a new home is an adventure filled with a series of choices. Finding the right neighborhood, analyzing commute times, and affordability are just a few of the things buyers take into account. But the road to homeownership can be a tricky one, filled with distractions that can throw you off your path. Avoiding the most common mistakes during the house-hunting process ensures that you’ll not only find a home you’ll love living in but one that will also meet immediate and future financial goals.
Although preapproval doesn’t mean you’re automatically guaranteed a home loan, it does provide a guide so that you’re not shopping for a home outside of your price range. It also lets you determine whether or not their terms work for your budget and expectations. Poor credit, high debt ratio, and fluctuating income impact the amount the bank will be willing to lend. Getting the preapproval before diving into the house-hunting process will save you, the seller, and the realtors time and frustration.
It’s not a secret that the price of a home is the primary factor determining whether or not you can buy it. Starting your search by looking for your ultimate dream home isn’t realistic and will only lead to disappointment. Begin your house-hunting search at the low end of your price range. When you’re determining how much you can afford, don’t forget to include taxes, home insurance, and homeowner association fees to help you get an accurate picture of the total cost.
Having an experienced professional guide you through the home buying process works in your favor. In most cases, the seller funds the buyer’s agent commission, so that’s a bonus. Real estate agents are not only familiar with the market, but they know which neighborhoods are in high demand, which ones are up-and-coming, and which ones to avoid. Real estate agents prepare the initial offer, negotiate any repairs, and handle any hiccups that occur along the way.
Some homebuyers become fixated on a certain neighborhood when searching for a home. But focusing only on your ideal neighborhood may cause you to overlook areas that have excellent growth potential. These neighborhoods often allow you to purchase a better home for less. And, if demand for living in these neighborhoods soars, so do your profits should you decide to sell your home in the future.
While the concept of a fixer-upper may sound exciting, repairs require skill, time, and significant funds. Don’t make the mistake of purchasing a property that needs a lot of work just to save money on the price of the home. Ask any homeowner who’s survived major renovations on their home, and they’ll tell you that repairs have a habit of costing more than what was originally budgeted. A damaged roof, an outdated HVAC system, foundation problems, mold, old insulation, uneven floors, inefficient windows, and plumbing issues are not a DIY project and can be quite costly to repair. A buyer should never close a deal on a home that hasn’t been professionally inspected.
Don’t get hung up on the superficial aspects of a potential home. Paint color, landscaping, and other details are cosmetic, and you can easily change them. If the home you’re touring still has the owner’s possessions in place, try to focus on the floor plan and the home’s amenities. It’s important to make a distinction between what is fixable and what isn’t. Be wary of cosmetic upgrades that try to lure you into paying more for a property. These sellers’ ploys play on the buyer’s emotions.
Ideal house size provides both comfort and good utilization of the space. If the home is too large, you’ll pay more for taxes, utilities, and maintenance. A home that is too small may not fit your future goals, such as increasing the size of your family. Real estate professionals say a good rule of thumb is to find a home that’s one size smaller than your dream home — if it falls within your budget. While most people search for a “forever home,” research shows that most people live in their homes around 13 years before moving, though the duration varies between areas.
While you shouldn’t rush through the decision to purchase the home you’ve honed in on, there’s a possibility of losing it to another buyer should you wait too long. House hunting takes a lot of time and adds disruption to other parts of your life. Once you feel confident about a property, it’s best to have the realtor make an offer.
Taking too long to decide whether or not to make an offer on a home isn’t a good move, but neither is rushing in. The housing market fluctuates, and sometimes there are fewer houses available to buy. As a result, the buyer may resort to grabbing up a house that may not meet their expectations or budget, fearing they’ll get outbid by another buyer. If the timeframe is feasible, try to wait until the right home comes along instead of rushing into a purchase.
To avoid bidding wars, many home buyers may try to beat the system by initially offering a much higher price, especially if they really love the property. The problem is that the amount they offer may be more than the home’s appraised amount, and banks won’t approve a loan. The buyer has to pay cash out-of-pocket for the difference between the shortfall on the bid and the amount of the mortgage. If they decide to sell the house down the road, they could owe more on the mortgage than the house is worth, a situation that real estate professionals call being “upside down.”