Purchasing real estate is an exciting endeavor, but it’s also one that can be complicated. Homebuyers can make mistakes that can have financial and lifestyle repercussions for years to come. Selling a home warranty for real estate agents can be huge because it helps their clients with repair costs in the future.
With mortgage rates near record highs and home prices at historic highs, prospective homeowners have a lot to think about. Here are six common home buying mistakes to avoid in 2023:
1. Not Getting Pre-Approved for a Mortgage
Most home buyers can’t buy a property outright with cash, so they must take out a mortgage. Lenders will review pay stubs, bank statements for checking, savings and investment accounts as well as documents proving assets to make sure you have enough money for the down payment and closing costs.
It’s important to get pre-approved for a mortgage before you start looking at properties. You don’t want to fall in love with a dream home only to find out that it is too expensive or the lender won’t approve the loan.
You should also avoid changing jobs, opening new credit cards or taking out new loans from the time of pre-approval through closing day. Significant changes in your credit or finances can derail the mortgage process and cause delays.
2. Not Having a Plan
Buying your first home can be a thrilling experience. However, it’s not a process that should be taken lightly. Homebuyers can make mistakes that can lead to unwanted process delays and financial issues down the road.
One mistake that many new homebuyers make is trying to find the unicorn—a house that checks all of their boxes. This can limit your real estate options and cause you to pass on good homes that would be perfect for your lifestyle.
Another mistake is not saving enough for a down payment. Ideally, you should save at least 20% to avoid PMI fees and keep your finances in check.
3. Not Having a Real Estate Agent
The home buying process is lengthy and complex, but it’s also exciting. Purchasing a home fulfills a dream for many people, but it can be easy to make mistakes along the way.
If you decide to go it alone, you will need to invest a lot of time into research. This includes researching comparable homes in your price range, reputable contractors and more. A real estate agent can save you a lot of time by doing this for you.
In addition, a top-notch buyer’s agent will know what kinds of inspections are necessary. This is a crucial service that many first-time home buyers miss out on.
4. Not Making a Competitive Offer
Home buying can be an exciting, but also stressful process. It’s important to understand the home buying process and avoid common mistakes so you can purchase your dream home.
In a seller’s market, buyers are often in competition with each other for the same homes. This can lead to bidding wars, which can drive up the original asking price of the home.
Some homebuyers focus too much on finding the “perfect” home, which can limit their real estate options and lead to overpaying. Instead, focus on finding a home that meets your needs and fits within your budget. It’s also important to consider additional costs of homeownership, like closing costs, insurance, and maintenance.
5. Not Having a Home Inspection
Purchasing a home can be exciting but it is also a big investment. If you are not careful, you can make a mistake that could cost you thousands of dollars.
A home inspection is a necessary step in the buying process that allows you to determine the condition of a property. It will also reveal any significant problems such as cracks in the foundation or safety issues.
Be sure to hire an inspector who has experience and is licensed. Ask your real estate agent for recommendations or do an online search for local inspectors. Also, choose an inspector who wants you to be present during the inspection.
6. Not Checking the Home One Last Time
Buying your first home is exciting and nerve-wracking at the same time. One mistake can throw a wrench in your entire home buying process, and you may find yourself living with the consequences for years to come.
Shopping for a home before getting preapproved for a mortgage can be a costly mistake. Make sure your credit score, income and debt-to-income ratio qualify you for a mortgage before shopping for a home.
Also, don’t forget to check out the home on your final walk-through to ensure that any repairs the seller agreed to have fixed are complete. This could save you a lot of headaches down the road!