The 10 Top Home-Buying Mistakes You Should Avoid

Home Buying mistakes you must avoid to have a smooth journey. Buying a home is a major financial decision, and there are plenty of ways to trip up. if you know what the most common home buying mistakes are and you prepare in advance, you can bypass them — and the negative side effects they come with. If you’re planning to buy a home, you should be ready to spend some serious cash. In addition to putting as much as 20 percent down, you also need to have enough in the bank to cover closing costs, moving expenses, repairs and the first few months’ mortgage payments, all without draining your emergency fund. Home buyers must also make high-stakes decisions about their budgets, ideal location and what they’re willing to sacrifice if the price is right. For first time buyers, navigating this landscape can be overwhelming, so it’s natural to retreat into what’s comfortable and known. And that’s where you can slip up. Common home buying mistakes committed by home buyers are as follows:

Home Buying Mistakes

There are many mistakes first-time home buyers make. Some are minor, some are costly and some even lead people to purchase a home that is completely wrong for them. Luckily, all of these mistakes are avoidable if you know what to look for. Here, we provide you the tips you need to avoid these common mistakes before you make them. Avoid these common home buying mistakes when buying your first home. Making one of these mistakes could cost you a lot:

Home Buying Mistake # 1: Not Choosing the right location and neighborhood

The three most important factors when buying a home are location, location, and location. Location creates desirability, desirability creates demand, and demand raises real estate prices. Setting your sights on an ideal neighborhood or specific amenities could be detrimental to the process. In fact, the biggest mistake first-time home buyers make is not keeping an open mind. Every city has neighborhoods that are popular, well-established or trendy. But it’s not wise to settle on a certain area before considering others.

Mistake # 2: Not Keeping an Open Mind

It’s important to keep an open mind in terms of what you’re looking for in a house itself. While there’s nothing wrong with dreams of a big, beautiful, newly-renovated space, sometimes a fixer-upper offers the right price in the right place. While you need to be honest about the types of DIY projects you can take on, it’s often worth it to “buy a home that needs a little bit more work so that you can personalize it yourself.”

Mistake # 3: Not Knowing Your Purpose

When you’re buying a property, it depends on what that property’s purpose really is. Try to understand from the outset what you’re looking for from a house, or you can end up disappointed. Will you want to sell it yourself in a few years? Or will you want to keep it in your family indefinitely? And really consider before you make that choice. If you do need or want to sell, you’ll find that it’s much easier to move a property that hasn’t been too thoroughly personalized.

Mistake # 4: Blowing Your Housing Budget

You don’t want to blow your budget because you’re fixated on small details that could be added or updated later, such as granite counter-tops. It might make more sense over time to do some of those projects yourself. Shopping for houses can make you a little giddy. Look at the top end of your affordable monthly payment, and think about what happens if your income goes down or they have to change jobs. Decide what percent of your budget should go toward housing. Insanely low mortgage interest rates—and the knowledge that they’ll eventually go up again—make a lot of people feel like it’s time to buy a house right now. And maybe it is … if you go about it the right way.

What to do: Get preapproved for a mortgage. Not only will this prove that you’re serious to your realtor and to home sellers, but it will also give you an idea of your upper limit. “Remember that the lender is there to make you a loan, and the more money you borrow, the better it is for them,” Derrick says. “They want you to max out. I would take the pre-approval number and cut about 20% off.”

Mistake # 5: Not Including Added Costs in Your Housing Budget.

Buying a home isn’t just a matter of replacing a rental payment with a mortgage payment. There are also maintenance costs, utilities and property taxes. People tend to forget about both property taxes and insurance when they’re thinking about how much house they can afford. The actual monthly payment could end up being well out of your price range when you figure those things in.

What to do: Ask the homeowners about their average utility costs and property taxes, get a homeowner’s insurance quote and budget about one percent of the home’s purchase price for annual maintenance. Then run the numbers to see if you can afford the home. And don’t forget about closing costs. The average cost to close on a $200,000 mortgage is about $3,754, according to Bankrate.com, but your broker should be able to give you an estimate.

Mistake # 6: Not Putting More Down Payment.

Even with lenders tightening requirements to qualify for a mortgage, it’s still possible to buy a house with as little as 3% down. That’s not necessarily a bad thing, but it does mean that you’ll have very little equity in your home when you first move into it. So, if something comes up, and you have to sell, you’ll end up owing more than you can get out of the sale once you factor in closing costs. It puts you in a precarious position. Even if that doesn’t happen, you’ll have to pay private mortgage insurance (PMI) every month until your equity in the home exceeds the 20% mark—and that could take years. (If you can’t put 20% down, your loan is technically considered risky—PMI is insurance that protects the bank if you default on your mortgage.)

What to do: Consider whether it’s prudent to buy a home now if you’re nowhere near having a 20% down payment. Yes, interest rates are low, but if you have to borrow thousands more because you don’t really have a great nest egg, it may be a wash in the end. You could avoid years of PMI, and owe a lower monthly nut, if you spend a year or two saving aggressively toward a down payment.

Home Buying Mistake # 7: Neglecting to Do Home Inspection.

Even if the home looks like it’s in winning shape, it would be foolish to skip a thorough inspection by a professional. People tend to think that the inspection and the appraisal are the same thing. They’re not. An inspector is there to spot the things you don’t know to look for. He’ll look for signs of water damage and check the insulation in the attic. If there are conditions that will need repair, you may be able to negotiate with the seller to drop the price. In other words, the home inspection is worth every penny.

What to do: Get recommendations from your realtor or friends who’ve bought in the area, and have a professional inspection done before you close on the house.

Mistake # 8: Making Emotional Decisions, not Careful Ones

Use your head, not your heart while buying home. When it comes to buying property, you have to measure twice and cut once. I think you really need to spend 90 percent of your thinking in the beginning from an investment lens, and then the last 10 percent can be pure emotion. Not the other way around. Use your unique intelligence and remain savvy when it comes to home buying. There are some who buy with their heart.

Home Buying Mistake # 9: Neglect to Get Everything in Writing.

You wouldn’t be the first home buyer to assume that the kitchen appliances come with the deal—only to discover an appliance-free kitchen on the final walk-through. Common points of contention: window treatments, hot tubs, light fixtures, shower and bath fixtures, ceiling fans and big appliances, such as washers and dryers. Replacing something you thought was staying could cost hundreds, so it’s not a small thing.

What to do: Go through your contract with a fine-toothed comb. If the item that you expected to be there isn’t, ask about it—and get it added in writing.

Other Common Home Buying Mistakes

Few other common mistakes committed by home buyers are as under:

Not checking your credit score before starting the loan process.
Not getting pre- approval for a home loan.
Paying Private Mortgage Insurance (PMI).
Nor checking the price of home owner’s insurance.
Going directly to the listing agent.
Not having a Real Estate Agent. Finding the home, yourself.
Not making a Wants VS Need List.
Getting too emotionally attached with the property.
Co signing a mortgage just before buying your home.
Choosing the wrong mortgage lender.
Getting the wrong kind of mortgage.
Buying a home you cant afford.
Not saving enough for down payment and closing costs.
Large cash deposit in your bank account.
Overlooking the community. Not paying attention to the neighborhood.
Forgetting about maintenance costs.
Only looking at few properties.
Making a lowball offer. Not understanding the market (Buyers market or sellers market).
Not Including The Right Condition in an Offer.
Signing purchase contracts and closing documents without reading and understanding.

Home Buying Mistakes – The Bottom Line

Buying a first home can seem stressful and overwhelming, and it isn’t without its share of potential pitfalls. If you’re aware of those issues ahead of time, you can protect yourself from costly mistakes and shop with confidence. For many people, a home is the largest purchase they will ever make in their lifetime, but it need not be the most difficult. If you choose the right agent, you are less likely to go wrong in your home purchase.

Buying a house is meant to be an exciting and enjoyable experience. With such a major personal and financial commitment on the horizon, you want to do everything you can to avoid buyer’s remorse after you sign the dotted line. Prepare yourself by getting your finances in order, having a clear idea of the kind of place you want to call home, and understanding the current market to have a happier, more successful home buying experience.

If you’re ready, give us a call at (562) 213-8892. With over 12 years of successful executive, and business experience facilitating residential, commercial, and private real estate transactions in Southern California, Faruk Bhuiyan is your best choice. Contact Faruk Now.