9 mistakes that home-buyers make
Buying a home is a very exciting prospect. So much so that many people rush the purchase, failing to realize how complex the process might be. This is especially true if you are buying your first home without conducting proper research. In order not to make all the common mistakes that home-buyers make, you need to know what they are first. And that is precisely what this article is there for, to allow you to learn from the mistakes of others and, hopefully, not repeat them.
9 most common mistakes that home-buyers make
Here’s a quick overview of some of the most common mistakes that you can make:
- Not getting a home warranty
- Getting a single mortgage rate quote
- Not hiring a real estate agent
- Ignoring first-time home buyer programs
- Ignoring FHA, USDA, and VA loan programs
- Spending all the savings
- Not researching the neighborhood properly
- Waiting too long or rushing to make an offer
- Not understanding renovation/repair costs
Additionally, you will want to make sure that you are not “Buying more home than you can afford”. You will want to account for any monthly expenses that you may have, as those do not count in the preapproval process. Aside from those, there are many other expenses that come with being a homeowner, so you will want to make sure you have some money on the side to cover them as well. But for now, let’s take a look at why these mistakes are so common and what can you do to avoid them.
Not getting a home warranty
Many people go “all-in” when buying a home. Only to realize that the appliances present inside the home can break down and that they suddenly have to foot a huge repair bill. There are so many reasons why you need a home warranty plan but the most important one is that getting a home warranty means that you will be safe from extensive repair bills in your most vulnerable period. For most newly-minted homeowners, the first year is absolutely critical, meaning that they need to know that everything is going to be fine.
But without a home warranty, there are no such assurances. A home warranty protects a homeowner from extensive repair bills and provides that all-so-important peace of mind. Not getting some form of protection is one of the main mistakes that home-buyers make. That being said, you will still want to be very careful before getting a home warranty. Not only will you need to avoid home warranty scams, but you will also need to carefully read the contract. Unless you are working with one of the most popular home warranty companies, you can count that there will be “fine print” inside the contract somewhere. And that fine print might be more important than everything else. Therefore, it is vital that you do your research right and that you never sign anything before completely reading and understanding the document.
Getting a single mortgage rate quote
There’s no denying that applying for a mortgage is a tedious process. But it is a very important one and it is in your best interest to go through it several times. A standard mortgage quote involves providing some of your financial documentation to a professional who then reviews it and provides you with a quote. It can be a lengthy process at times and many people dislike going through it. But that is probably one of the most costly mistakes that home-buyers make. By not getting a second (and a third) mortgage rate quote, you are potentially depriving yourself of getting a fantastic deal elsewhere.
Mortgage companies are very competitive, as it is a lucrative business with little to no risk, so there’s always a possibility of getting a better deal. We’re not saying that you should go through the process a hundred times but something around five times is quite reasonable.
Not hiring a real estate agent
Purchasing a home can be very complicated. Many people try to go through the entire process on their own, only to realize that they should have hired a real estate agent in the first place. Yes, a real estate agent takes a “cut” but most of the time that cut is more than worth it. Similar to the benefits of home warranty plans, having a real estate agent provides you with peace of mind. Purchasing a home can induce quite a bit of anxiety, after all, and having a real estate agent in your corner can alleviate much of it. Plus, you will be free to deal with other matters while your real estate agent is doing all the necessary work.
Ignoring first-time home buyer programs
When you are a first-time home buyer, a down payment is most likely going to be your largest concern. Even though there are numerous first-time home buyer programs, many people choose to simply ignore them, to their detriment. Just about every state provides first-time home buyers with amazing options, some of which do not require any down payment at all! At the very least, these programs can offer assistance with the down payment, as well as provide competitive mortgage rates.
Check out the deals from the top rated home warranty companies today!
Therefore, what you may want to do is check what your options are. Each state has its own, unique, programs, and some programs are nationwide. Prime examples of these programs are the U.S. Department of Agriculture loan, a no-down-payment program from the Department of Veterans Affairs, and the Federal Housing Administration loan programs. Some first-time home buyers programs can provide you with a down payment as low as 3%! Incidentally, ignoring these programs is the next mistake that home-buyers make.
Ignoring FHA, USDA, and VA loan programs
While we’re on the subject of programs, there are several of them that are run by the government, programs that prospective homeowners choose to ignore at their peril. We’re not saying that they are your best option at all times but you do want to know about them and what they can do for you. Not doing so is definitely one of the most egregious mistakes that home-buyers make.
FHA loans, for example, provide prospective homeowners with down payments that are as low as 3.5%. But what makes these loans really stand out is the fact that home-buyers may be able to get them even with an imperfect credit score!
USDA loans are ideal if you are looking to purchase a home in a designated rural environment. There is no mortgage insurance with these loans, all you need to do is pay an annual and a guarantee fee. You also get full financing and are not required to put in any down payment. This is, by far, the best deal you will be able to get, no contest. Provided that you are buying a home in a U.S. Department of Agriculture-designated rural area, of course.
VA loans present the best deal for people who have served in the military. They are guaranteed by the U.S. Department of Veterans Affairs and do not require any down payment while getting 100% financing. Veterans do not even need to pay mortgage insurance but they do need to pay a funding fee.
Check out the deals from the top rated home warranty companies today!
Spending all the savings
It is never a good idea to spend entire savings on purchasing a home. Even a new home may experience unexpected repair costs, or your homeowner’s insurance deductible might be too much to bear. Many first-time home buyers find themselves in this situation. A solution to this problem is to simply have some money in your savings account or to make sure that you know exactly what does a home warranty cover and what is covered by homeowner’s insurance. Bottom line is that you need to be prepared for anything that might happen. Yet, many people fail to do so and find themselves in an unenviable situation.
Not researching the neighborhood properly
While the price of your new home might be the most important factor, the neighborhood is probably almost equally as important. You can’t enjoy your new home if the neighborhood is not to your liking, after all. Therefore, before you commit to anything, make sure that you are at least aware of what the neighborhood is like and that you are willing to contend with it.
Waiting too long or rushing to make an offer
A lot of first-time home buyers either rush to make an offer or wait too long to make one. As far as mistakes that home-buyers make, these are probably the most common ones. That being said, it is quite difficult to strike a good balance between the two. Ideally, you will want to be 100% certain that you want to purchase the home before making an offer, regardless of how good that offer might be. But at the same time, you don’t want to wait too long to make the offer, either.
Not understanding renovation/repair costs
Lastly, most first-time home buyers fail to realize how much of an investment a new home requires. This is perfectly normal, as even professional renovators sometimes make similar mistakes. That being said, you can expect that the contractors you initially talk to will provide you with an unrealistically low quote. To form a budget for home improvements and repairs, you will want to talk to several contractors. Get a few referrals from your friends and family and see if the quotes match. If everyone says the same, then it is safe to proceed.
If you want not to repeat the mistakes that home-buyers make, the best thing to do is to question just about everything. Always search for the better option and, in time, you will find it. You also want to make sure that you are covered “no matter what”, by purchasing a home warranty.
You can find all the information about home warranties, as well as recommendations on the best home warranty companies in the country, right here at Consumer Opinion Guide. We work tirelessly to provide you with all the information you need to know about purchasing and insuring your new home!