Especially if you’re a first time home buyer, you know that buying a house is one of the most important purchases, and probably the biggest investment, you’ll make in your life. If you’re starting that process, you’re most likely looking for ways to avoid making mistakes, mistakes that could be costly. Many homebuyers are heartbroken when they find out they’ve lost their dream home to another buyer at the last minute, or find out later that they significantly overpaid. We think it’s important to stay as informed as possible about the real estate market and partner with a trusted and experienced real estate agent early so that you can avoid some of these expensive mistakes and ensure closing on home purchases.
At Harbor Realty, we strive to keep you in the loop on the home buying process, so we’ve compiled a list of common buyer traps that you might run into when you’re trying to buy.
Avoid These Traps That Can Delay Closing On Home Purchases
We understand more than anyone that buying a home can be a huge undertaking that is often overwhelming for those who don’t have experience in real estate. The last thing you want to do is choose the wrong home or overpay or worse, lose the house you want during the closing process. Read on as we discuss some of the pitfalls that many buyers face that can delay or even reverse closing on home purchases.
Not Getting Pre-Approved Before You Start
The very first thing you should when you decide you want to buy a house is to get pre-approved for a mortgage. Whether it’s just you or you and a spouse going in on it together, you should do this before you get on Zillow and start looking. Not only will this help you establish how much you can actually afford, but your real estate agent can use this knowledge as a tool during the negotiations. When you have a pre-approved mortgage, you’ll be able to confidently shop around with a sense of security, knowing that the money will be there when you finally find the home you’ve always wanted and there won’t be any hold ups when closing on home purchases.
Pre-approval is fast, easy, and free – in fact, most lending institutions will offer mortgage pre-approvals over the phone with no obligation.
Not Putting Enough Money Down
Another mistake that could trip up closing on home purchases that a lot of first time home buyers make is not knowing how much to save when they feel they are ready to buy. 20% down on your mortgage is the pretty typical rate, and though you are not always required to make that full amount, you might need additional insurance or loans instead. Private mortgage insurance is a premium you pay to protect the lender and could cost you nearly 1% of your home loan’s value each year. For example, if you have a $200,000 mortgage, you could be paying an extra $1,000 to $2,000 each year if you don’t put down the full 20% down payment up front.
When you weigh the pros and cons, it makes sense to delay homeownership for a while until you’ve saved up the money you need. However, if you are currently serving or have served in the U.S. military, you may qualify for a $0-down mortgage option that is backed by the U.S. Department of Veteran Affairs. Talk to your real estate agent if you have questions, they might be able to help you find lenders who offer first time home buyer lending rates or give you advice on the home buying process in general.
Buying A House That Doesn’t Meet Your Needs
Maybe you always had the dream of living in a townhouse close to downtown and so when the opportunity arises, you buy it right away. But what happens after you’ve lived there a few months and realize it just really isn’t practical for your life? Oftentimes home buyers find that they get so caught up buying the house they think they want, they forgot to consider things they really needed. Either the house is too big, too small, or the commute ends up being way more than they bargained for.
As seasoned agents, we recommend making a wish list, and a must-have list. Figure out your priorities from the get-go, and don’t get caught up in features that might not actually benefit you and your family in the long run. This will ensure closing on home purchases without any of that buyer’s remorse.
Stretching Your Budget For A Bigger House
At the end of the day, all the agents and brokers at Harbor Realty want you to have a house that you love that meets all of your needs, no matter what you’re looking for. But don’t take on too much house, especially if you can’t really afford it. Your total housing costs shouldn’t exceed 30% of your take-home pay. This includes mortgage payment, property taxes, insurance, and any costs that come with upkeep. Make sure you take that into account when deciding how much you can afford to spend on your new home.
If you and your spouse decide that you can afford to stretch your budget a little more, you risk falling behind on all the costs that come with buying a home, which might mean you have to dip into your hard earned savings more than you thought, or even fall behind on other bills. Not to mention that a large house includes more home maintenance than you might expect and the costs for that start to add up. Hopefully the lists you made will help you get your priorities in order, and give you a good perspective on not only what you can afford, but how much time you’re willing to invest in the upkeep.
Not Hiring A Professional Home Inspector
A huge mistake that can absolutely delay closing on home purchases is not hiring a professional home inspector. We know that home inspectors cost money and if you have a smaller budget to start with, you may be inclined to skip the inspector altogether. Any agent worth their salt will tell you that this is a terrible idea. Sure, certain problems are easy to spot, like water damage or cracks in the foundation, but there are plenty of potentially costly issues that are harder to see.
From electrical wiring, plumbing issues, falling roofs, asbestos, mold, and more – there are so many things that only a professional would be able to see. All of these can turn into expensive fixes, and if you don’t have an inspection done, you could be stuck with thousands of dollars in repairs after you’ve already finished closing. Once you get the results of your home inspection, your real estate agent will use that information as a negotiation tool to help you save money. You might even be able to get the seller to make the repairs for you or deduct the amount it would cost from your home’s purchase price.
Conclusion
Are you ready to buy and avoid any potential delays to closing on home purchases? Start with speaking to your local agent. We’d love to help you find the right house for you. From showing you the best neighborhoods, to getting the space you’re looking for, the experts at Harbor Realty are well-equipped in the market.
Contact us today, we’d love to answer all of your questions and walk you through the process to ensure closing on home purchases.
