“Home buying is not just about investing in property, but investing in a dream.” ~ Christina Fitzer
With today’s interest rates being significantly higher than they were in 2020, it’s no surprise that monthly mortgage payments are up by nearly 20%. According to USA Today, the average homebuyer spent around $2,605 per month on a mortgage in 2023, compared to the $2,190 they were spending in the previous year.
Despite this hike in rates, it’s a no-brainer that mortgage payments can be more affordable than paying rent down the line, especially if you plan to stay in the property for the long haul. Besides, almost everyone dreams of owning a home one day as it allows for personalization and offers a sense of community.
Just think of it, you can paint your rooms any color you choose, change the floor pan, add a deck outside for those weekend barbeque hangouts, or even grow a garden in your backyard without asking your landlord’s permission or risking eviction. In essence, you can do what you want to your house and property because it’s all yours.
These upsides make homebuying an ideal investment for most people. However, many newbie home buyers fail to realize that purchasing a home is a lot of work, which can quickly turn from a dream into a nightmare if proper planning and research aren’t done. As such, in this guide, we’ll discuss the five common pitfalls you should avoid when securing your dream property.
Tip #1: Not Getting Pre-Approved for a Mortgage
Getting mortgage preapproval is the best way to go if you’re determined to secure a home as soon as possible. This is especially true if you’re a newbie homebuyer with zero credit history. With a pre-approved mortgage, you can tell sellers that you’re serious and your offer is realistic, thereby leaving an impression that will help you beat the competition in a seller’s market.
A pre-approved mortgage also allows you to get your house hunt started on the right foot. Why? Because you’ll know your exact budget, determine if you’re eligible for any government assistance programs or first-time homebuyer grants, such as the Federal Housing Administration or Veterans Affairs loans, and get a comfortable monthly mortgage rate.
Tip #2: Buying a Home That Exceeds Your Needs or Budget
New home buyers, particularly first-timers, often make the mistake of buying a home with more square footage and features than they need, which usually ends up costing them a lot more money. You don’t want to own your dream house only to realize it’s too expensive to run. So, during your property hunt, ensure that you consider the price per square footage and available amenities to get a clear picture of how much it will cost you to maintain, repair, replace, or upgrade.
If you’re purchasing a single-family home, you can expect the maintenance costs to be lower than those of a condo or townhouse. What’s more, you have more control over maintenance decisions. However, if you’re buying a multifamily home, expect your monthly utility and insurance to be higher due to high liability risks. Keep in mind that your monthly mortgage will increase as you add features, such as a pool or hot tub, a fireplace, an extra bedroom or bathroom, or a large backyard.
You might also need to purchase insurance to cover those features and pay more to maintain them. If you have deep pockets for this type of property, by all means, go for it. Otherwise, look for a simple house that checks all the boxes.
Tip #3: Failing to Hire a Professional Real Estate Agent
An experienced real estate agent comes in clutch to ease the homebuying process. Ideally, you’d want to hire a local expert who is familiar with the laws and codes in your area, knows the neighborhood, and has a list of properties that fit your needs and budget. The right realtor will use their knowledge and experience to save you time, money, and a lot of stress.
For instance, they’ll negotiate the right price for you, find listings that meet your requirements, handle all paperwork, and communicate with other parties involved in the transaction. All these are tasks that you’d rather not do on your own.
Of course, working with a real estate agent may require a fee, but it will prove to be worth it as you’ll be able to rest assured that someone is watching your back. If you need a professional realtor, they are available on Leadar, a real-time verified B2B database, where you can find contact information for experts in any industry or service.
Tip #4: Neglecting Professional Building Inspection
One crucial step prospective home buyers overlook is home inspection. They do so, perhaps because they are so eager to close the deal, want to save up on costs, or don’t deem it necessary. But that also means that they could be buying a property with major flaws or damages that may endanger their lives and cost them thousands of dollars to fix.
Most homes for sale have a few flaws, and that’s normal. However, there are some issues you can’t skimp on, such as:
- Dangerous electrical wiring, plumbing leaks, water damage, foundation cracks, or lead paint
- Termite infestation, mold, or pest control issues
- HVAC system faults and malfunctioning appliances
Some of these problems aren’t easy to spot to an untrained eye, which is why having a certified home inspector tag along during your property hunt is paramount, as such a professional will help you uncover potential defects in the home. This approach will not only put your mind at ease but it will also give you the upper hand when negotiating the purchase price.
While home inspection is a standard part of the transaction, it’s not mandatory in some states. So, if you come across a seller who isn’t open to inspection, walk away from that property.
Tip #5: Being Unable to Look Beyond the Property’s Current Condition
One of the best things about homebuying is the ability to remodel the property as you wish, especially if you’re buying an existing home. In this sense, you can turn a simple duplex into your dream house by adding another room or renovating the kitchen, bathroom, or outdoor area. Thus, if you happen to fall in love with a property that needs major repair work, don’t give up on it just yet, as you can always customize it to fit your style and taste.
You just have to ensure that you can afford to make the upgrades. If you have some extra funds in your budget, you can get to work right away by either using the DIY approach (which isn’t recommended for more complex projects) or hiring contractors to do the work for you.
Buying a home can be a little tricky if you don’t know what to expect. You might find yourself at the wrong end of the deal, get exposed to life-threatening defects, or burn a hole in your pocket while trying to keep up with mortgage and maintenance. Thankfully, this guide has addressed these and other pitfalls associated with homebuying. We hope you’ll take the right steps to make your buying journey memorable.