Buying a home is one of the most exciting things you’ll do in your life. It is so easy to get caught up in the process and joy of the moment that you make critical mistakes that could prove costly when all is said and done. These are five mistakes many buyers make that you want to avoid.
1) Buying More Home than You Can Afford
You don’t want to find yourself in a situation where you are house rich and money poor. That means you lack the funds necessary to properly maintain your home and any type of lifestyle in the process. It’s important to understand your financial circumstances and choose a home that will keep you in a comfortable debt situation.
Lenders use a metric to determine how your debt compares to your income. Ideally, they prefer that your debt-to-income (DTI) ratio is 36 percent or less after the price of your home. This means that your monthly expenses for all debts should account for no more than 36 percent of your total income. The lower that number is the better it is for your financial situation now and in the future.
2) Skipping Out on the Home Inspection
Home inspections are one of the most important things you can do when buying a home. While it cannot possibly reveal all potential problems with the home, it can identify problems that will need to be addressed quickly after buying the home so that you can adjust your bid to account for the repairs required.
The last thing you want to do is purchase a home only to determine after you’ve made the purchase that there is mold in the floor joists, a roof that needs to be replaced, or plumbing that dates back to the 1920s. A thorough inspection can help you identify costly problems that may cause you to shift your offer or withdraw it completely if the repairs required are too extensive.
3) Not Working with a Real Estate Agent
Another of the big home-buying mistakes, especially for first-time home buyers is to buy your home without the assistance of an experienced real estate agent. Not only can this professional help you find a great home that meets your needs and matches your other criteria, but this professional can also help you through the home buying process. This includes everything from making an offer to navigating the closing table.
4) Making Emotional Purchasing Decisions
While you do want to love the home you buy, you also need to know that it is the right decision for you, your family, and your financial situation (today and in the future). It’s easy to fall in love with kitchens, closets, and bathrooms. But you need to know that the home offers plenty of bedrooms, bathrooms, and room to grow for your family. You never know what the future holds and your home is a long-term investment. You need it to grow with you and your family. The other side of that situation is that you become so invested in a specific home that if the deal falls through you feel a sense of devastation or get into a financially unhealthy bidding war to try to make it happen.
5) Choosing a Mortgage Package that isn’t in Your Favor
The right mortgage deal can make or break your home buying experience. For instance, an adjustable-rate mortgage may give you low-interest rates today, but once the first “adjustment” occurs, that could change in an instant. Working with an independent lender can help you get the best rates possible so that you ultimately pay less for your home.
Contact Mid America Mortgage today to learn how we can help you get the right mortgage to meet your needs now and as they evolve over time.