Home Buying Mistakes to Avoid
by Shawn Carvin, Senior Mortgage Banker
Home Buying Mistake # 1:
Failure to monitor your credit report and score
This is an easy home buying mistake to avoid. Free services are available to help you monitor your credit score through all three major credit bureaus. It is imperative to review your entire report, as errors are not uncommon and could result in higher interest rates or even jeopardize your chances of getting approved for a loan. Keeping a close eye on your credit will also assist you in achieving your financial goals for the future, not just home ownership.
Home Buying Mistake # 2:
Failure to prepare a realistic household budget
Not taking the time to understand your true monthly expenses can leave you “house poor.” Buying a home can be a dream come true, but if you can’t afford to furnish your new home, travel, or even entertain friends or family, it can quickly turn into your worst nightmare. To avoid this home buying mistake, take the time to create a monthly budget, and include every expense, even seemingly insignificant ones – they can really add up.
Home Buying Mistake # 3:
Overlooking the total cost of home ownership
Preparing your household budget is important, but don’t forget to factor in the all the costs associated with home ownership. Maintenance and repairs, taxes, and insurance are just a few of the line items you will need to consider. Be sure to add these expenses to your monthly budget when evaluating the amount you can afford to spend on your new home.
Home Buying Mistake # 4:
Shopping for a new home but not knowing what you can afford
Falling in love with the perfect house in the perfect neighborhood is exciting — until you find out that you can’t actually afford to buy it. Avoid this disappointing home buying mistake by figuring out what how much house you can afford before you begin the search. There are mortgage payment calculators online that can help you get a rough idea as to how much you can spend on a home, but they can be somewhat misleading. It’s best to consult with a mortgage lending professional in order to nail down your home price budget.
Home Buying Mistake # 5:
Shopping for a home without mortgage pre-approval
A mortgage pre-approval gives you more credibility with real estate agents and home sellers. A pre-approval means that a mortgage lender has verified your documentation and credit profile and has to qualified you to borrow specific amount. Keep in mind that a pre-approval is not a commitment from the lender. But it is helpful in speeding up the underwriting and loan approval process if you decide to go with the lender that issued the pre-approval.