Buying a home is a large investment in both time and money. The focus is usually on the tasks that need to be completed before the big purchase, but many homeowners forget about the things to avoid before buying a home. One mistake could cost you the home of your dreams.
Here are the top 10 mistakes people make before buying a home.
1. Close or open a line of credit
When you are about to buy a home, you want your credit score as high as possible.
Opening a new line of credit, or closing one will decrease your credit score, and decrease the amount you will qualify for when trying to secure a loan for a home.
2. Change jobs
When you are going through a career change, it would be best to buy before you change jobs. It will be challenging to secure a good loan if you have started a new job within the last 2 years.
3. Default on a payment Keeping your credit score as high as possible before buying is essential and defaulting on a payment is one way to tank your credit score. Make sure you are on top of payments, especially the year before you decide to purchase a home.
4. Buy new furniture Buying a new sofa, bedroom set or dining room table before you buy a home is not the best idea, especially if you open a new line of credit to pay for it (reason #1).
5. Forgo getting pre-approved When looking to buy a home, getting pre-approved for a loan will help you understand how much you can afford and more importantly strengthen your purchase offer.
6. Spend your nest eggSpending all of your savings before buying a home is a large mistake. Even if you are able to secure a loan with little to no money down, you will need the extra money for closing costs, escrow fees, inspections etc. Keeping spending to a minimum before you buy is essential.
7. Get pre-approved numerous times When you get pre-approved many times, it will reflect poorly on your credit report. It is a mistake to have your credit run numerous times in a small window to time.
8. Have your pre-approval letter for the highest amount you are qualified for
Even if you have your credit run by one lender, you can ask them to modify your pre-approval letter depending on the amount of each separate offer. Say you are pre-approved for $400,000 but only are writing an offer for $375,000, it would be best to have the letter changed to $375,000.
Customizing the pre-approval letter will let sellers see that you approved for the amount you offered and not a penny higher. This prevents the seller from assuming you can pay more than you are offering.
9. Have unrealistic expectations of what you can affordEveryone wants a nice home with a pool, tennis court and 10 acres. Is that a reality for most? No. Getting pre-approved will help to set realistic expectations of what type of home can afford in the market you are looking in.
Why waste time looking at homes that are out of reach when you can spend time and energy looking at homes you can afford?
10. Forgo working with a professional Of course the biggest mistake you can make when buying a home is to not use a REALTOR to help. A REALTOR will work to help you find a home in your price range and protect you in the negotiation process.
Did you know as a buyer you pay nothing to a REALTOR? The seller pays their commission.
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