Don’t Make These Common Home Buying Mistakes.
With interest rates low and home prices still at the bottom of the market, it makes now a good time to buy. The Lawhead Team would like to share some helpful tips to making sure you go about buying your home the right way.
If you are planning to move again, it might not be the time to buy for you. If you are renting, writing a check each month to pay someone else’s mortgage can be tough. Buying a home and assuming you’ll be able to rent it out when you move in a couple years may not be the wisest plan, equity or no equity. If you aren’t in an area with a strong rental market that will cover your monthly mortgage, wait to buy your home until you are sure you will be there for a long time.
Home shopping is fun but it is important to know what you can afford first before starting the buying process. Keep in mind the possibility of changing jobs, losing a job or any other major event that will affect your income. Get pre-approved for your mortgage to find out exactly how much you can afford. This also proves to a realtor you are a serious buyer. Keep in mind, the more money you can borrow, the more your lender makes. Make sure you are comfortable with the amount you can get a loan for and calculate how much your mortgage will be from that.
This leads us into added costs. Not only should you figure the monthly mortgage cost but make sure you add in any association fees, maintenance costs, utilities, property taxes and insurance. The actual monthly payment tends to be well out of your range once you factor in these extra necessary costs. You can ask the seller how much their average utility costs are, property taxes and get a homeowner’s insurance quote before buying. Once you get this info, run the numbers to see if you can comfortably afford the home.
There are loans nowadays that allow you to only put 3% down. However, with a lower amount down you have to pay private mortgage insurance every month until your equity in the home exceeds the 20% mark. Decide whether or not it makes sense to buy a home if you can’t afford 20% down. Interest rates are low but if you have to borrow thousands more because you don’t really have a nest egg, it may be a wash in the end. If you spend a year or two aggressively saving toward a large down payment and plan buying later, you could avoid years of private mortgage insurance.
Read the fine print. Don’t assume the kitchen appliances come with the house or the drapes in the home will stay when the seller moves out. Ask if the following will be included when buying: window treatments, hot tubs, light fixtures, shower and bath fixtures, ceiling fans, and larger appliances like the washer and dryer.
It is imperative to get an inspection. Even if the home is brand new and in winning shape, it is foolish not to have a professional give it the once over. An inspection and appraisal are not the same thing. An inspector is hired by you and on your side, looking for detailed things like if the foundation is cracked or any signs of water damage. Things that will cost you a lot of money down the road that you wouldn’t be able to notice. Interview a few different inspectors and go with the one you feel most comfortable with before buying your home.
Take time to make upgrades to your new home. Just because your home is new and shiny doesn’t mean you have to go out and buy all new appliances, furniture, cars, etc. Don’t get yourself into a pile of credit card debt just to keep up with the house. Take your time.