Purchasing a home is one of the biggest financial decisions many people may ever make. That may sound exciting, but therein lie many potential pitfalls and expensive mistakes. Whether you fail to see lurking issues in the residence or are not clear on the terms of your bank loan, innocent mistakes can cost tens of thousands, if multiplied, hundreds of dollars.
Know these pitfalls, and you will likely save yourself a lot of agony (and cash) years after the dust has settled. Here is an article with a list of common mistakes made by homebuyers in the U.S. market and 4 possible strategies to avoid them. If it is your first time buying your own house or even if you plan on buying a new home for your growing family, it pays to know what things to watch out for when looking at homes so that you can avoid some serious issues when making those decisions and protect your investment over the long term.
Skipping the Home Inspection
The home inspection is one of the biggest mistakes a buyer can make. I mean, it may come across as a service that you could take or leave or an unnecessary expense if the house is looking great, but this can sink you! You never know what might be lurking behind the facade of a property, and an inspection helps to expose all subtle facets of its nature. So if there’s bad wiring, plumbing leakage, mold, or water damage, that could easily cost hundreds of thousands to fix once you are the title holder. And without a detailed inspection, you can also make sure those hidden repairs are made, and swallow what looked like an affordable home near me as just another expensive investment postmortem only.
Home inspections give you the upper hand when negotiating with the seller. The buyer can require certain repairs or a reduction in the price if any major issues are discovered. By doing this, you remove some of your bargaining power, and that can end up costing you hundreds or thousands in damage later on. Inspecting generally costs a few hundred dollars, but that pales in comparison to what they might reveal, costly problems if you end up buying the property.
Buyers may think they can trust the seller’s disclosure statement, but sellers are not always aware of all their problems, or in some cases, do not fully disclose them. When you hire a certified, independent home inspector, it leads to your interests being defended and ensures that you sleep well at night. It is one of the successful strategies in purchasing a house and can save you hundreds of thousands over time.
Behind the scenes: why LBC Mortgage gets loan approved faster — understanding this process can help you move quickly once your inspection is complete, and you’re ready to buy.
Ignoring the True Cost of Homeownership
Buyers concentrate more on the mortgage payment and less on the full costs of homeownership. This is a mistake that can lead to major financial strain post-closing. Beyond your monthly loan payment, if you own a home, that probably includes property taxes, homeowners insurance, utility bills, maintenance, and maybe even HOA fees.
Widely variable property taxes (hundreds or thousands of dollars added to housing costs per year!). Premiums are different for the age of a home, its location, and various risk factors like flood zones or wildfire areas. Home size and type of heating and cooling systems directly affect utility bills, which can skyrocket.
The most neglected, but biggest part of this is maintenance. Roofing, HVAC maintenance, landscaping, and other surprise repairs certainly start to stack up over the years. Neglecting to plan for these fees may lead you to put off crucial repairs that will only end up causing worse problems down the road.
Avoid putting yourself in a position where you end up surprised, sitting down and calculating everything together, the home insurance costs here, and other household charges there. Try using online calculators, or speak with your real estate professional and lender to get a better understanding of what you can realistically expect to pay in closing costs. The full measure of owning your home without actually knowing what it means is that you must identify your undue financial obligation in advance so that in the future, you can live a healthy lifestyle with a new place of residence.
Rushing the Mortgage Approval Process
While there are a lot of things you can do earlier during the buying process (reducing day-to-day expenses, setting aside an emergency fund), one very important step — being pre-approved for a mortgage — takes time. You should not rush through the mortgage approval because it will end up costing you more in other ways. We know a lot of buyers start hunting for homes without lining up financing or take the first loan they are offered without comparison shopping. This can result in a higher interest rate, unfavorable loan terms, or even being denied a loan altogether.
Mortgages are about income verification, credit checks, debt to ratio ratios, and assets. Filling out the form with inaccurate or incomplete details is often enough to stave off a loan sanction altogether. First of all, prepare a comprehensive document in advance and keep in touch with your lender.
Keep in mind that mortgage rates can differ greatly between lenders, so it is always a good idea to shop for the best deal available. A very small change in the interest rate can increase that total by tens of thousands of dollars over the full course of a mortgage.
Other buyers don’t give enough consideration to what types of loans and programs might be a better fit for their financial situation, such as FHA or VA loans that can offer lower down payments or rates.
So do your homework in understanding what the hell is going on with mortgages, comparison shop for the best offers, and work with someone who knows what they’re talking about (which currently means most definitely not any of 99% of lenders) to get some money. Take your time on this step, it’s one of the most critical parts to save or cost you thousands throughout the journey to homeownership.
