August 20, 2021
If your Instagram feed is full of gorgeous houses and HGTV is the only channel you watch, you may be thinking about the possibility of buying a home of your own. While you no doubt have plenty of ideas about decorating, landscaping, and entertaining in your space, there are some things you’ll want to avoid as well. Here are our ten things to watch out for as you get geared up to buy a home.
1. Overspending for the Home
In a hot real estate market, you can end up competing against other buyers for the home of your dreams. That could mean that you’ll put aside fiscal responsibility in favor of the thrill of “winning” in a bidding war. Talk to your real estate professional about the home you’re interested in and come up with a smart budget based on solid comparable property values so that you don’t end up spending more than you can afford.
2. Increasing Your Debt
Opening up new credit accounts, buying a new car, or running up your credit cards in the months leading up to your home purchase can result in a more difficult approval process and higher interest rates on your mortgage. Save major purchases for the days and weeks following your closing so that they don’t affect your credit score or debt to income ratio.
3. Job Switching
If you just can’t stand that annoying co-worker or demanding boss for another minute, remind yourself that job switching can sink your home buying plans before they’ve begun. That’s because you’ll present a better credit risk if you’ve got a solid employment history and verifiable earning potential.
4. Dipping Into Your Savings
Even if you have a fairly solid idea of how much you’ll need for the down payment, there are also inspections, closing costs, and other items to consider. Save as much as you can so that you’re prepared for any eventualities throughout the homebuying process and in the days after closing.
5. Focusing on Bells and Whistles
Remember what they say: “You can change the paint color, but you can’t change the floorplan.” Focus on the big picture when making your decision. It’s easy to get distracted by shiny objects like fancy upgrades or updates and forget to drill down to the real nuts and bolts of home ownership. Make sure that the home you’re buying is a solid investment and that it’s located in a neighborhood you love.
6. Forgetting Pre-Approval
In order to narrow your search and put together a competitive offer, you’ll want to be pre-approved for your mortgage before you find the home you love. A pre-approval process involves checking your credit history and reviewing your supporting documents so that your lender can provide you with a tentative estimate of the loan amount for which you’ll be approved.
7. Letting Emotions Rule
So, you’ve found the home of your dreams. It’s love at first sight and you’ll do anything to own that home. Yes, there are cracks in the foundation and the roof is leaking, but there’s just so much potential, right? Sometimes, even the most logical home buyers get swept away by an emotional response to a property. Make sure that you consult your head as often as your heart during the home search.
8. Thinking Short-Term
Maybe you’re buying a studio condo but thinking about starting a family. Maybe you’re buying a home in a commuter area but planning to change jobs next year. While you may make some decisions based on short-term convenience, try to think at least five years down the road when making your home buying decisions so that the home you choose will continue to work for you in the long run as well.
9. Buying for the Wrong Reasons
Don’t buy a home because your mom and dad think it's time for you to do so. Don’t buy a home because your best friend just did. Buyer's remorse is one thing when it comes to buying shoes or a used car -- it’s quite another thing when it comes to buying a home. Make sure you are ready for home ownership and that it fits into your budget and lifestyle.
10. Buying With the Wrong Person
If you purchase a home with a friend, family member, or significant other who has bad credit, you’ll pay more for the money you borrow in the form of a higher interest rate. If you purchase with someone who’s not ready for the commitment of home ownership, you could end up holding the bag if they decide to bow out. Make sure that you buy with someone who’s on the same page as you and ready for the responsibility.