Don’t Be Fooled! 10 Embarrassing Homebuyer Mistakes to Avoid
Apr 01, 2019
At one time or another, April 1st has made fools of us all. But while it might be fun to fall for a silly, innocent trick on a holiday, you don’t want to be caught playing the fool when you’re buying a home.
At Primary Residential Mortgage, Inc., we know that the homebuying process can be intimidating. But with the right support, it doesn’t have to be.
To help you avoid feeling stressed, intimidated or foolish, we’ve rounded up common issues you should be aware of.
Protect your hard-earned dollars and your dignity by avoiding these embarrassing homebuyer mistakes.
1. Starting your home search without pre-approved financing
Finding a new home is exciting, and it might be tempting to start looking at home listings right away. But don’t give in. Before you start house hunting you’ll want pre-approved financing.
Because getting pre-approved before you search for a home comes with a lot of benefits:
It helps you narrow your search to homes that you can actually afford, saving you and your Realtor time.
It keeps you from setting your heart on a home that you can’t finance.
It improves your odds of having an offer accepted.
It gives you more negotiating power than competing buyers without pre-approval.
Quick note: Pre-approval includes going through the underwriting process, so it won’t be instantaneous. You can also ask your local lender about getting pre-qualified, which is faster, but pre-qualification is less official and carries less weight than a pre-approval.
2. Assuming you’ll have to make a huge down payment
20 percent down can be a hefty sum of money, even if you’re buying a modestly-priced house. Sadly, many buyers let that down payment intimidate them without realizing there are plenty of loan options out there with lower down payments.
If you need to keep upfront costs down so you can get into a home without saving for years, ask your local loan originator about alternatives to conventional loans. You may be eligible for a loan that requires little-to-no down payment.
3. Letting someone else determine your budget
No one knows your budget like you do. Don’t take on a loan that will leave you stretching to make payments or force you to give up things you love just because you were approved for a larger loan amount.
Use your lender and Realtor as resources, but go through your budget on your own and buy a home that you can afford and enjoy without stressing to make ends meet.
4. Setting unrealistic expectations
You deserve a home you love, but be realistic when you’re setting expectations. If your expectations are too high, the house hunting process will be frustrating and tedious instead of exciting.
Maybe homes in your dream neighborhood are well out of your budget, or maybe a home with the perfect kitchen won’t also have a huge back yard.
Decide on your must-haves and deal-breakers, and then be ready to compromise on smaller things.
5. Focusing too much on the house and ignoring the surroundings
It’s crucial to choose a house you’re happy with, but don’t forget the neighborhood.
Will you be miserable if there are no locally-owned restaurants nearby for date night? Do you need a park close enough for your kids or pets? Do you want a safe place to go for morning runs?
If you’re interested in a home, start exploring the neighborhood. And if possible, visit it during the day, evening and on a weekend so you can get a good feel for the area and imagine yourself living there.
6. Skipping the home inspection
It would be heartbreaking to realize too late that your dream home had thousands of dollars of water damage lurking in the basement, shoddy electrical work, or a plumbing system that was on the verge of giving out.
Don’t get caught off guard by expensive issues that could hurt your home’s value and clear out your savings. Make time for a thorough, professional home inspection before you buy a home so you can relax knowing you’ve made a smart investment.
7. Underestimating repair and maintenance costs
While a thorough home inspection can catch any serious issues, no home is perfect and eventually you’ll need money for repairs and maintenance.
Common practice is to budget one to four percent of the value of your home for annual repairs. If you’ve got a newly built home, you’ll probably be safe with a lower budget, but if you’ve purchased an older home, it’s smart to plan on spending extra on maintenance for things like older pipes, outdated electrical systems and general wear and tear.
8. Foregoing a home warranty
Speaking of home repairs, there are some things you can’t always plan for. Home warranties are usually inexpensive and they can help cover the cost of pricey appliances like water heaters, air conditioners and other systems that are expensive to replace. If the large appliances and systems in your new home are a bit older, a home warranty is a smart, affordable investment that could save you thousands down the road.
9. Making big financial changes close to a purchase
Big financial changes could impact your credit score or your chances of your home loan being approved. If you know you’ll be purchasing a home soon, avoid the following:
Getting a loan for other large purchases (e.g. vehicles)
Taking on a lot of credit card debt for a vacation or large expense
Withdrawing a large amount from an investment account
10. Forgetting additional mortgage expenses
It’s easy to focus on your down payment and monthly costs and forget about all the other expenses that come with mortgage. As you prepare to buy a home, be sure to account for closing costs and property taxes. And if you choose a non-conventional loan with a lower down payment, remember to budget for mortgage insurance as well.
Be smart this April Fools’ Day! Avoid these to save time and protect your wallet as you hunt for your new home. Contact a PRMI loan originator today for more homebuying advice.
If you're ready to take the next step, work with a team that can provide the personal attention you deserve. Our mortgage company has helped over 200,000 borrowers fulfill their dream of home ownership. We'd love to help you too!