Home buying can be tricky – especially for first-time buyers. Here is a list of some of the most common mistakes made by buyers.
1. Looking for homes before you are pre-approved.
This is typically the most common mistake made by buyers. It is all too easy to get caught up in the excitement of wanting to buy a new house you to forget that you might not be able to afford exactly what you want. Getting pre-approved will help you save yourself time and disappointment by having a clear picture of what price range you can shop in.
Having a pre-approval letter will also show sellers and listing agents that you are a serious shopper. If you are looking to start shopping for a Nashville area home, let one of us know! We can start the process for you and make it as easy as possible.
2. Talking to only one lender.
You would never just want to get a quote from one lender. Getting several quotes will ensure you're getting the best deal and the best rate – potentially saving you hundreds or thousands. Typically, we will refer our clients to several of our trusted lenders, so we've got your back.
3. Rushing through the process.
Home buying is no small life event. It can get particularly tricky! It's important to have a solid plan in place to guide you through your home buying journey. We recommend starting very early, perhaps a year prior to trying to get pre-approved. Use this time to improve your credit, pay down debts, and save as much money as you can. Doing this will put you in a much better place come home buying time. You will likely get a better rate and be approved for a higher amount.
4. Don't drain your savings -- you don't always need to put 20% down.
A lot of times, buyers will drain their savings account to pay for closing costs or for their 20% down payment. Although you will not have to pay for mortgage insurance if you put 20% down on a conventional mortgage, if you don't have at least a three to six month blanket of savings, don't put as much cash down. There are loan options that allow you to put as little as 0% to 3% down, instead of the long-held 20% belief. It is too risky to drain your assets like that just to get a lower mortgage payment.
5. Leave your credit alone.
Aside from taking steps to improve your report, don't touch that credit! Home buyers all too often sabotage their closing by adding a new loan, credit card, or increasing a balance on an existing account on their credit report. The slightest change in your credit can completely derail your closing plans. Sometimes, even paying off a loan early can slightly lower your score. So, be sure to consult your lender before you do anything that could impact your credit report – they know best & can give you a detailed plan to keep your credit on the right track.
6. Making emotional decisions.
When you buy a home, you're making one of the largest investments of your life – you want to make sure it is the right decision! It's easy to get attached to a home you find – so much so you overpay and stretch your budget.
Remember, going beyond budget will only hurt you in the long run and could possibly affect other aspects of your lifestyle. Make logical, financially smart decisions after your emotions have cooled.
7. Waiting for the 'perfect' home.
Don't bypass a solid choice in hopes of finding your 'perfect' home – it's possible that home may never hit the market and you will regret not purchasing a previous option. After all, once you purchase your home, it's yours. Make memories in it while making it perfect for you.
8. Miscalculating the cost of owning a home.
While owning a home is an amazing feat, there are hidden costs that you should be prepared for. Rest assured, as long as you are aware of them and are prepared for them, there is nothing to be nervous about. In addition to your monthly principal and interest payment, you should be prepared to pay some or all of these: mortgage insurance, homeowners insurance, hazard insurance, repairs, maintenance, utilities, and etc.
9. Going at it alone.
Buyers think they can handle it all and dive head first into a real estate transaction. Your REALTOR® will be able to advocate for you and negotiate on your behalf – thus saving you money, frustration, and time.
There are a lot of steps and potential mistakes to avoid along the home buying journey. That's why it is a great idea to have a licensed real estate professional help you and guide you in the right direction. Did you know, as a buyer, most of the time you aren't paying any commission for services?
What are you waiting for, let's get in touch!