by Danni Rodgers
(Atlanta, Georgia, USA)
Buying a home is almost always a long and confusing process. There may be many twists and turns and many opportunities for things to go wrong.
Here are 5 common home buying mistakes to avoid.
Mistake Number 1: Buying a home at the maximum sales price your lender will approve.
Lenders and real estate agents are paid on commission. They make more money the more you pay for a home. In addition, mortgage underwriting guidelines don’t fully take into account all the potential expenses you will have once you become a homeowner. These expenses range from ordinary maintenance items through unexpected repairs such as water heaters or heat pumps going bad ahead of schedule.
Have your lender compute a sales price with a payment equal to 25% of your take home pay. This will leave substantial room to accommodate unexpected costs of ownership without causing financial hardship.
Mistake Number 2: Using the same real estate agent as the seller.
The agent with the sign in front of a home for sale represents the seller. They are obligated to act in the seller’s best interests. Even though dual agency (representing both parties) is legal, don’t let the seller’s agent represent you. Get your own buyers’ agent to represent your interests. Most of the time doing so does not cost you one penny extra.
Mistake Number 3: Confining your property search to too small an area.
If you want to get a deal on a home you must be flexible about where you are willing to live. If you insist on living within a certain neighborhood, you don’t have the flexibility to take advantage of other factors which might help you find a better home at a better price. For instance, couples going through a divorce will often sell their home at a ridiculous discount just so they can get out from under it.
Mistake Number 4: Failing to read the purchase contract closely.
Real estate agents will tend to gloss over a lot of the details in the purchase contract because they want to hurry and get a signature. However you need to carefully read the entire contract, including the boilerplate legal language, before you sign your offer to purchase the home. You may even want to have an attorney look at it.
Take careful note of all the deadlines listed in the contract so that you don’t end up waiving your rights because you relied on the agent to keep up with the dates for you. You pay the price for contract defaults, not the agents. If everything goes smoothly, then the contract may seem unimportant later. If the deal starts to unravel, however, every sentence starts to make a difference.
Mistake Number 5: Not getting a home inspection.
Many buyers feel they can save a few hundred dollars and skip having a home inspection done when buying a new home or a well maintained resale home. You should absolutely never purchase a home without getting a professional home inspector to look at it first.
Even a brand new home which passed all the government inspections can still have problems. No matter how well maintained an older home looks, problems can still be imminent even when they are not obvious. A home inspector is trained to locate these problems so you can deal with them prior to closing or perhaps move on to purchase a different home.
Owning a home is the American Dream. You can avoid having your home purchase become a nightmare if you take care to avoid these common deal killing mistakes.