There’s a lot of pressure involved in buying a home. It can feel like you’re walking a tightrope, with the slightest wrong move resulting in disaster.
Well, it may not be a tightrope walk, but there are still a lot of disastrous mistakes you can make. Here are some of the mistakes you need to avoid!
Buying instead of renting
This might seem like an odd place to begin! But you need to consider it.
Owning a home is made out to be the ultimate symbol of achievement. There seems to be this idea that if you don’t your own home, then you simply haven’t been successful enough yet. There’s also the problem of people going around saying that renting is something that only chumps do. After all, if you’re paying all that money every month anyway, why not have it put into eventual full payment of a home?
Well, the truth is that renting isn’t always the worst idea of the two. There are plenty of articles explaining why you should buy instead of rent. There are plenty of articles explaining why you should rent instead of buy. At the end of the day, it all depends on your individual circumstance. Don’t dismiss either idea. Try to calculate the pros and cons against your own situation.
Not planning enough in advance
People don’t just suddenly sit up one day and announce “I’m going to buy a home!” then start looking. Well, okay, some people do do that. But it’s not how you should do it. Most people will have been making a plan of action over a long period of time. If you want the best show at buying a home with minimal fuss, you should start planning now. Get a budget together. Start thinking about how much money you can save up. Find out what housing prices might look like in a few years.
Waiting for a potential lender to check your credit score
So you’ve decided to get a loan to make the payments for your house. But do you know what your credit score might be? Of course, it’s not always possible to know exactly how a lender is going to score you. Credit scores aren’t universal, after all. But hey, why worry about it now, right? If you’re applying for a loan, then you’re going to get a credit check. Why bother thinking too much about it until you get that score back?
Mistake alert! You should get a credit score check before you start applying for a loan. The fact is that the processes prior to achieving a loan cost money. And if you fail at the first hurdles, then you’ve essentially wasted money. You’re entitled to a free credit check every year, so make sure you use it before you start applying. If you get a bad score, then you’ll know to take action without the lender having to have told you for a fee.
Not getting help when you need it
This entire process can be long and complex. When you think about “getting help” to buy a home, you might be thinking of the help as a loan. But you may even need some help to get through the process of getting the loan you need! Getting a good deal here is going to help you out tremendously in the near future. It’s recommended that you work with an advisor – specifically, a mortgage broker – if you feel unconfident. If you’re not well informed about mortgage brokering, you can get the info from SMBIA.
Ignoring the bigger picture
So, it looks like you’re good to go, financially. You’ve got the money you need for the initial payments. You’ve got the number of a good mortgage broker. You’ve even got your eye on a gorgeous home for an absolute steal. These are all of the ‘small picture’ details that you need to consider. It may not seem like a small picture, but that’s the truth. You may also want to consider the big picture.
Which is what, exactly? The big picture is found in housing market trends. As you probably know, the housing market is always changing. To use more economically-minded language, it’s not a static market. It fluctuates, always. But you may not understand how much supply and demand affects the housing market. A given market can either favor buyers or it can favor the sellers. You should try to get an idea of when the market is tilted in your favor!
Misbehaving financially while lenders are watching
This is a mistake that a lot of people make. It sounds kind of silly, at first. Who could possibly make that kind of mistake? But the truth is that it stems from a misunderstanding that most people have about the lending process.
So, you go to a lender. They check your credit score. They have a look at your bank balance and have a good dig through some of your bank statements. They’ve had a look at the assets that are in your name, too. They’ve decided you’re good to go. It’s at this point that people start to make mistakes. They think that because this stage is over and done with that they can now do whatever they like with their assets. The mistake: they think this stage is over and done with!
Remember: lenders are going to keep an eye on all of those things throughout the entire process. Until the loan is completely closed and the process complete, nothing is certain. Shoving some undocumented cash into your account before a loan closes, for example, could see you being declined for a loan.
Not getting the building inspected
You’ve got the approval you need. You’re having a browse through the market and boom. You find an incredible house. It’s the right size, the garden is gorgeous, the neighborhood is safe – all that good stuff. But just because it looks great, that doesn’t mean everything is perfect. It’s essential that you make sure the building is thoroughly inspected by a professional. Hopefully, you won’t find anything that will stop you buying the house. Either way, if there are any problems with the home, you need to know about them before you sign anything.
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