Buying a home is a major investment and the journey can be overwhelming, especially for first-time buyers. To help you avoid common mistakes, we've compiled a list of the top five most crucial blunders that home buyers make.
1) Relying solely on pre-qualification as a budget guide :
Your pre-qualification is just an estimate and shouldn't be used as a guarantee. Mortgage brokers typically base pre-qualifications on 50% of your gross income, without factoring in taxes, insurance, or other expenses. Do your own calculation and determine how much you're comfortable spending on a monthly basis.
2) Only saving for initial house costs:
Before buying a home, make sure you have your savings in order. This includes a down payment, closing costs (2-3% of the purchase price), and emergency savings. Don't become "house poor" by only putting away money for the house and not the unexpected.
3) Not having a clear timeline:
Buying a home is a time-consuming process and it's important to have a clear timeline. Plan for 1-2 weeks to pre-qualify for a home, up to two months for the home-showing phase, 30-45 days to be under contract, and the closing. Factor in any credit score improvements that may delay pre-qualification.
4) Chasing the "golden egg":
During your home search, you may come across the "must-see" house in your neighborhood. This often happens right before the weekend and everyone flocks to it, putting the power in the seller's hands and driving up the price. Instead, consider houses that may offer more value with a few updates and aren't getting as much attention.
5) Buying a home for equity:
The market can be unpredictable and a quick flip may be risky. While buying a home can be a great long-term investment, make sure it aligns with your goals and doesn't strain your finances.
Buying a home is a big decision. Feel empowered to take control and remember stay Choosi!