Buying A New Home? Don’t Make These Mistakes
Buying a new home, just like other feats, is lovely. Whether you are buying for the first time or upgrading from your recent home, the feeling is usually excellent.
Also, buying a new house involves some steps, from loan pre-approval to finally moving in. As a first-time home buyer, It will be beneficial to seek help to avoid missing some steps.
Further, the euphoria of owning a new home can be short-lived if you make some common errors. These mistakes could also result in buyer’s remorse. However, these mistakes can be prevented. Let’s go through most of these common mistakes new home buyers make.
Not hiring an estate agent
Some new home buyers avoid hiring real estate agents because of the emergence of many real estate websites and apps. Most believe they will be saving some dollars without realtors.
However, as a future home buyer, it is ideal to seek the help of experienced real estate professionals like letting agents (in) Peterborough, to avoid making mistakes that can be costly. A realtor will save you the overall stress of buying a new home.
Also, their access to databases like Multiple Listing Service (MLS) will provide many options that suit your budget and lifestyle. Recent research by the National Association of Realtors shows that about 90% of home sellers listed their properties on MLS.
Further, you can direct your energy toward other things, knowing your realtor will handle the negotiations, communication, and paperwork. Gladly, their costs are included in the closing costs.
Read more about the step-by-step process of buying a property.
Not considering the location
New home buyers mistakenly ignore the house’s location before signing the papers. Your neighborhood is vital while choosing a new home.
For instance, if you are moving in with your family or plan on raising a family in the new home, check if there are families in the environment. Check if it’s close to your work, schools, grocery stores, or gas stations.
If you’re the type that dislikes noises, ensure public places are not close by. If you like sports, check if any stadium is around the area. Again, ensure amenities that’ll make life easy and joyful for you and your household are close.
Also, ensure that if you have to resell, the environment won’t reduce the price instead of adding to your resale value.
Buying a home you can’t afford
Another common mistake among homeowners is getting homes that exceed their budget. Some new home buyers acquire houses they can’t afford, leading them into financial trouble.
There are many ongoing costs related to owning a property in the UK (our example) including service charges, council tax, repairs, and mandatory major works costs (the latter one is for leasehold properties only).
Meanwhile, compare your income and your expenses. Consider your recurring costs and other bills. Can you still live without financial stress after removing the mortgage for the month? If not, go for a lesser mortgage.
Before buying a home, do your research and see what your neighbor is trying to sell their home for. This will allow you to reduce the asking price in a reasonable way.
Also, if your bank offers an amount surpassing your expectations, it should not push you into buying homes you can’t afford. Deep down, you know how much you can spare per month for a mortgage, don’t go beyond that level.
Not getting a pre-approval from a lender before offering on the property
Home buyers sometimes fail to obtain Pre-Approval before shopping. Banks give a pre-approval letter also known as mortgage-in-principle before approving your mortgage.
Mortgage in Principle is a statement from a lender saying that they’ll lend a certain amount to you before you’ve finalised the purchase of your home. Mortgage brokers can grant you with “Mortgage in Principle” which many real estate agents and conveyancers need before moving forward with the home buying process.
Mortgage-in-principle can also show the possible interest rate, assisting you in evaluating if you can cope with the monthly repayment or not.
The pre-approval shows the seller you mean business. It gives you an edge over other buyers. You can even make an offer with the letter. If you shop for a house before your pre-approved mortgage, you might lose the home you like to another buyer.
Making a low down-payment
Saving for a down-payment (also known as a deposit) could be tough for a new home buyer. A down payment is a fraction of the cost of your new home that you pay from your pockets before financing the rest with a loan.
Down payment could range from 3% upward, depending on the flexibility of your lender. Most people don’t know a lower down payment increases the amount you’ll pay in the long run.
For instance, a down payment lower than 20% attracts Private Mortgage Insurance (PMI). PMI is meant to protect your lender against loss. It ranges from 0.19% – 1.86% of your mortgage, and It is paid monthly alongside the interest.
Meanwhile, you can avoid PMI if you pay a bigger down payment. That apart, a large down payment reduces your interest rate (a percentage of your total mortgage).
A large down payment also reduces the loan period and relieves economic stress. You are advised to pay a large down payment if you can. If not, ensure your down payment is above 20% of your mortgage to avoid PMI.
Ensure you take the necessary steps to avoid common mistakes. You can hire a realtor who’ll save you a lot of stress. Also, a low-down payment can increase your total mortgage payment over time.