5 of the Most Common Home Buyer Mistakes
The real estate market is hot out there, especially if you are in Seattle or San Francisco. It’s not rare for home buyers to miss out on buying their dream home because they didn’t make an offer fast enough. Even worse, there are horror stories of buyers waving inspections, and paying thousands of dollars over the asking price just to buy a home they “sort of” like.
When you are ready to buy, try to avoid these very common mistakes as it may be the difference in a set of new keys being placed in your hands or driving around to more open houses.
Not Being Pre-Approved
With homes being sold after being on the market in just a few days, having all your ducks in a row is imperative to be taken seriously by a home seller. Remember, the home sellers goal is to sell the house, so waiting around for you to get approved mean more cost to them. Being pre-approved also lets you know what price range you can afford and locks in an interest rate. The process can take a bit of time as you will need to provide personal financial documents. To learn more about becoming pre-approved, check out our article here.
You Don’t Know What You Can Afford
Buying a home can be fun. Then reality sets in and you realize your dream house may be a bit out of reach in terms of a monthly financial obligation. Many home owners begin their home searches online, fall in love with a house, and later realize they can’t qualify for the home. There is a very big difference in what you qualify for and what you can afford. Many borrowers are shocked at what they qualify for and don’t realize that taking a loan out for the largest amount you qualify for, can put you in a very difficult financial climate each month. Find out if owning is right for you by reading a quick article here.
Waiving the Home Inspection
To this day, I do not understand how a home buyer can be brave enough to waive a home inspection on one of the largest purchases they will ever make. This would be like an investor putting $500,000 into a business by just looking at their website and waiving due diligence without looking at the financials, the business process or even meeting the people involved. Sounds crazy, right? A home inspection usually runs between $300 and $500 and can inform you of any larger costs you will run into while owning a home. For example, a $25,000 dollar roof repair would not be a fun surprise and could increase your debt-to-income ratio.
Having A Down Payment Less than 20%
For many first-time home buyers, coming up with a down payment can be difficult. When average home prices in the Seattle area are above $500,000, it can be nearly impossible to come up with a 20% down payment. Yeah, that’s about $100,000. If you don’t have a down payment you will be required to pay private mortgage insurance, or PMI. If you are hoping to buy a home in a certain price range, you will likely have to decrease the amount of home you are buying to compensate for the increase PMI cost which could be a few hundred extra dollars a month.
Not Anticipating Extra Costs
Most home buyers get caught up in the excitement of a new home and want to look at the best-case scenario. This is a bad approach because well, life happens and on a 30-year-fixed loan, that’s a long streak of the best-case scenario. Home buyers should pay extra close attention to HOA fees, PMI costs, year land taxes, yard maintenance costs, upgrades and home fixes. If you talk to 100 home owners, don’t be surprised if 100 of them say that home ownership is expensive. As you make your budget and understand what you can afford, be sure to budget in extra costs.
At Faira, it is our mission to provide home buyers and sellers a transparent and fair way to buy and sell a home. We provide upfront transparency reports allowing buyers to see inspection reports, home title report and more. Also, Faira offers a great way for home buyers to get 3% back on their home purchase. That means you can buy more home, or go on a trip, or even buy furniture or upgrade your new home with the money you receive back on the sale.
Interested in buying a home but don't know where to start?