Buying a home is a journey. You’ve read about ours, here, and even though we’re seasoned professionals with a thriving business; we’ve still had some crazy moments, nervous moments and even times where we were overwhelmed. That’s why when we say, we understand how tense it can be to make the largest financial purchase of your life, we really do!
The process of buying a house is filled with unknowns and missteps so common any new home buyer seasoned or not could fall prey to them. If you’re entering the real estate market for the first time, then it makes sense to learn from the mistakes others have made before you, so that your quest to find your dream house doesn’t end in disaster. With that said, here are the top 5 mistakes you should do everything in your power to avoid when buying a house.
Not Understanding Your True Financial Position
It’s no secret that we are fans of Dave Ramsey and his smart money programs. We try very hard to be smart with our money, but again, faced with our largest financial purchase – we relied on the advice of experts in the business.
The bottom line is, even if you are a frugal spender, the reality is that no one really knows what condition their finances are in until they speak to the bank. We cannot truly emphasize the importance of getting a pre-approved mortgage. One of the greatest benefits of a pre-approved mortgage is that it lets you know exactly which houses you can afford and which are clearly out of reach (at the moment, but there’s always tomorrow).
Today’s real estate market is such that Realtors® won’t accept an offer without a pre-approval and many will not even show a home to a Realtor® without one either. Now, we’re not talking about a pre-qualification here. We’re talking about a full pre-approval where the bank has looked at your income, credit, tax returns, references, etc. and all you need now is the home and accepted purchase offer.
Forget to Consider Additional Expenses
Many first-time home buyers are blindsided by unexpected fees throughout the process, forcing them to go into costly credit card debt (which lessens your chance for a pre-approval from a bank/mortgage broker) or find a different house entirely. Make sure you factor in all the costs of home-ownership, not just the initial price of the house.
There are many closing costs, such as a well/septic inspections, home inspections, bank appraisals, and others that you need to make yourself aware of before you make an offer.
Once the deal is finalized, the bills don’t stop either. That lawn isn’t going to maintain itself, and you can’t heat a house on dreams. Seasonal changes can also throw another curveball at you. If you’re buying your house in the summer, make sure you know how much it will cost to keep it running in the winter. Electric heat, for example, is much more costly than a gas furnace, and, central air that is a must have during a Texas summer, can be crazy expensive to run throughout the entire house when it’s 99 degrees Fahrenheit outside and the rattlesnakes are ringing your doorbell asking to borrow a cup of ice!
Which is why, it’s never wise when buying a home to…
Neglect to Hire a Realtor®
Yes, we know that many people you know (and many that you’re close to) have bought or sold homes in the past. We are also fully aware that HGTV, LIfetime, AMC and probably even Animal Planet at this point have shows that highlight the home buying process.
These shows go as follows: The buyers (one of whom sells painted rocks from a tree house and the other who makes hammocks from leftover textiles) have a combined budget of $5,000,000 and have a mortgage pre-approval that’s enough to buy the White House.
They view three homes and they pick one. Then ta da! They’ve closed, moved in and we get to see how they decorated the house with hammocks and pet rocks three months later. There’s the real estate world tied up in a neat little bow in thirty minutes (minus commercials). Even the reality shows that try to portray a day in the life of Realtor® is more hype and less reality.
The truth is we are professionals and this isn’t an easy business to survive in and it’s extremely hard to thrive in, so the folks who are are the ones who are doing it right.
We’ve been saying all along that this is your largest financial purchase so invest in someone with the experience to guide you through the chaos. If you are a first-time home buyer and don’t need to sell a home in order to buy the home you have in mind, there’s no cost to you for working with a Realtor®. The commission that the Realtor is paid, if you do buy a home, is paid for by the seller of the home, not you as the buyer.
An agent can also help manage your expectations on any given home. Online home prices are notoriously inaccurate, and it is certainly deflating to learn that the house you’ve been pining over for two weeks is $250,000 more than you thought. A real estate agent can help cut through this confusion so that you don’t waste your time during your search and they often have a good idea as to the true value of the home to compare to the asking price so you’ll be reassured of the real worth of the property. You can’t forget that prices are listed at what the market can bare, meaning for what people are willing to pay for them, not what they are necessarily worth.
Not only that, Realtors® will most likely make sure that you don’t…
Decide Against Getting a Home Inspection
If you’re running low on cash, it is tempting to start cutting corners, but don’t skimp on the home inspection. The cost of an inspection can save you literally thousands of dollars in the long run, as well as weeks of headaches – Which is worth every penny as a home buyer. Of all the mistakes on this list, this is the easiest one to avoid, and potentially, the most financially devastating mistake to make.
Despite this, about 10% of houses aren’t inspected. Because the unknown can happen, it’s always a good idea to have a bit of a financial nest egg set aside with enough money on hand before the deal is finalized so that you’re not in a pinch if you do receive an exponentially larger bill down the road.
There are also homes that have been pre-inspected and have home warranties, which, by the way, are something that you can arrange to have on your new home after you close.
But by far, the worst mistake you can make when buying a house is…
Making Your Decisions with Your Heart
You walk into that perfect house, with that perfect porch, and you immediately begin imagining your life there. Suddenly, you can’t even think of living anywhere else. Forget the cost! We are buying this house no matter what.
This kind of thinking can be dangerous because instead of looking for potential negatives about a house, you start ignoring them, which is bound to cause problems eventually. No matter how alluring a house is initially, it’s important to keep an open mind and make your final decision based, not just on aesthetics, but on what is financially sound.
By keeping these common mistakes in mind, you can avoid the bank-account-busting consequences that many others have had to endure. The challenges of buying a home are too numerous to list on just one blog, but with the right kind of preparation, and the right mindset, and the right advocate(s) by your side -you will have the tools you need to make a deal that meets your financial and personal goals.
Putting it All Together
Home-ownership can be one of the biggest and best decisions you ever make. Coming home to a place that is yours is a feeling that you can’t describe but one that everyone should be able to experience. The security of knowing that with each mortgage payment your building your financial nest egg can’t be expressed by a dollar value.
Wherever you want to call home, be it the liveliness of the city or the quiet of the country and whatever you choose to live in, be it a small condo or a ten-bedroom farmhouse, home is always where the heart is.
Getting there can be a tricky process though, and we’re here to help, because we want you to feel that feeling of being home. It’s more than just a profession to us, it’s who we are. So let’s get started, shall we? You can call us at 972-665-284 or drop a line here.