Emotion and inexperience are among the factors that can trip up buyers during the homebuying process. Here are 9 common pitfalls and how to avoid them.
Buying a home presents many challenges. Some are expected, and some are probably surprising to many people. The process can get very emotional for buyers, which can lead people to make costly mistakes. Factors like inexperience can also cause avoidable problems. Thankfully, help is available, including real estate and mortgage professionals. The following are nine common pitfalls or mistakes that may happen during the home buying process, along with some tips on how to avoid them.
Not Knowing What You Can — And Can’t — Afford
One of the worst things that can happen to you as a homebuyer is falling in love with a home you can’t afford. On the flip side, you might be missing out on amazing opportunities because you’re not exploring all of the options within your price range.
These aren’t hard-and-fast rules. They’re just general rules of thumb. But you can estimate your price range in several ways, including the following:
Determine your total gross (before tax) household income. Twice that amount is the low end of your price range. Three times that amount is the high end. If you and your partner make $150,000, then your price range for a home is $300,000 to $450,000.
Use the “28/36 rule,” which states that (1) your total monthly household expenses should not exceed 28% of your gross monthly income, and (2) your total monthly expenditures on debt should be no more than 36% of your monthly income.
Other relevant factors include credit history and cash reserves.
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Knowing What You Want, But Not What You Need
You might have a list of features that you want in a home. Some of them are likely to be features that you need, but some might be less essential than you realize. Knowing what’s most important to you is key to finding the right home. You can communicate these needs to a real estate agent. If you’re not sure what’s most important, they can help you identify the features you can’t live without.
Suppose, for example, that you need a one-story house because you or a family member has issues with accessibility. You don’t want to waste your time looking at two-story or split-level houses that aren't going to work for you.
Not Getting Pre-Approved For A Mortgage
Most people are going to need to borrow money to buy a home. You want to know how much money is available to you as soon as possible, which is why pre-approval is so important. Here’s what you don’t want to happen: you find the perfect home that meets all of your needs and is within your price range, only to have your dreams dashed when you find out you don’t qualify for a mortgage for it.
Getting pre-approved also makes you look better to sellers. Texas has been a sellers’ market since at least 2020, and buyers are often fielding multiple offers. If you can show a seller that you will be ready to close with financing, they might be more likely to pick you over others.
Not Using A Real Estate Agent
An old saying states that a person who represents themselves in court has a fool for a client. It’s a harsh thing to say, but there’s some truth to it. The same could be said for trying to buy a house without a real estate agent.
It’s one thing to go visit open houses by yourself, but once you are ready to make an offer on a home, real estate agents have invaluable knowledge and experience. The seller’s agent has a duty to their client to obtain the highest possible sale price. In business terms, the seller’s agent is not your friend. You need someone on your side who, if necessary, can go toe-to-toe with the seller’s agent.
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Skipping Or Skimping On The Inspection
You will have an opportunity to have an inspector take a thorough look at the home before you make the final decision to buy it. Don’t pass on this, and don’t discount its importance. This is likely to be the largest financial transaction you’ve ever made, so you need to know what you’re buying. Your inspector might find a problem that you can use to negotiate a lower price, or that makes you re-think the entire deal.
Not Considering The Entire Neighborhood
You’re not just buying a home. You’re also buying into a community. Consider what is going on around the home when deciding whether to buy it. For example, you might:
Talk to the neighbors and ask how they like living there.
Look at the state of infrastructure in the neighborhood. Are the roads in good repair? Are there work crews making lots of noises at all hours of the day? Are there plans for highway construction nearby?
Look into development plans for the area. Are new developments likely to drive housing prices up? Are businesses abandoning the neighborhood?
Ignoring Red Flags
Sometimes a house that looks perfect is hiding some serious flaws. This could be defects or problems with the house itself, which is why a thorough inspection is so important. It could be something about the seller that seems off. Whatever it might be, pay attention to any misgivings that you have, however minor they might seem. You don’t want to end up with an expensive fixer-upper or a house with serious title problems.
You’ve found the perfect house. It’s in your price range. You have pre-approval for a mortgage. Despite all this, though, the seller hasn’t accepted your offer. You might be tempted to start sweetening the pot right away, but this could be a mistake. You don’t want to rush the process, and you definitely don’t want to raise your offer before the seller has even responded to your earlier offer.
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Don’t drag your feet, either. Carefully weigh all of your options before making a decision, but do so quickly. There’s a good chance that other eager buyers are waiting.
Buying a home can seem overwhelming, but you don’t have to do it alone. The experienced mortgage professionals at the Wood Group of Fairway are here to help you find a mortgage solution that best meets your needs. We’re also well-connected with top-notch local realtors. Find out what you qualify for and team up with the mortgage lender Texans trust!