The median home price in 2021 is $350,000. Between 2018 and 2022, the median price rose by $25,000. Between May 2020 and May 2021, it rose by $66,000.
Meanwhile, first-time homebuyers comprised 31% of the marketing in 2020.
If you’re buying a home for the first time, it helps to have a home shopping strategy in place. Otherwise, you could make costly mistakes when vetting your options for homes. You could pay more than anticipated, too.
Don’t let it come to that! Instead, avoid these home buyer errors during your search.
With these tips, you can stay on track and accomplish your home shopping goals. Start the hunt for your new home, sweet home with these tips today!
1. Not Tracking Your Credit
Before you start making costly home buyer errors, sit down and establish your entire home shopping strategy. Make a list of the tasks you need to complete.
For example, you’ll want to avoid making the mistake of neglecting to check your credit.
Do you or your spouse have serious credit issues? These might include:
- A history of late payments
- Debt collection actions
- Specific debt
If these problems sound familiar, mortgage lenders might offer a less-than-ideal interest rate. They might even deny your application altogether. You might struggle to meet your deadline as a result.
Before that can happen, make sure to pull your credit report using tools like:
Look for any issues and dispute any mistakes with the creditor right away. Make sure you have supporting documentation to back up the changes. You might want to consider using a credit monitoring service as well.
Otherwise, late payments or delinquent accounts can stay on your credit report for around 10 years.
Try to improve your credit score in the meantime. Make the minimum monthly payment on your debts. Avoid maxing out your available credit.
Try to pay your bills on time, too.
As you work on improving your credit, remain patient. The process can take time.
2. Neglecting to Get Pre-Approved
Avoid searching for homes until you’re pre-approved.
Otherwise, you might fall in love with a property, only to miss your chance because of the approval process.
Getting pre-approved for buying homes can help you navigate stiff competition and multiple bids. Otherwise, buyers might not consider your offer. Having a pre-approved letter from a lender will show buyers you’ve done your due diligence.
It shows buyers you have the means to repay your bills based on your:
- Financial assets
- Employment history and income
- Credit history and score
If you’re trying to navigate a competitive market, sellers won’t take you seriously unless you’re pre-approved for buying homes.
3. Not Shopping for a Mortgage
You might leave money on the table if you don’t shop for a mortgage.
Consider applying for a mortgage from different lenders before you start comparing house prices. Applying will help you determine what you can afford. It can also help you compare:
- Loan products
- Closing costs
- Interest rates
- Lender fees
Shopping for a mortgage can also put you in a better position to negotiate. You’ll have an easier time finding the best deal.
Consider working with a mortgage broker. They can shop rates on your behalf. You can share time and money by comparing multiple options.
4. Buying More Than You Can Afford
Before you start comparing house prices, take a look at your budget.
Avoid maxing out your loan. Otherwise, you might struggle to handle your monthly payments. Instead, consider a loan that’s about two times your gross annual income.
You can use a mortgage calculator online to estimate your monthly payments.
Otherwise, you might make the mistake of buying a more expensive home than you can afford. You could end up experiencing buyer’s remorse.
5. Not Requesting Professional Help
As you make an effort to avoid these home buyer errors, remember you’re not going through this alone. Consider requesting professional help before developing your home shopping strategy. For example, you might want to hire a real estate agent.
There are over two million real estate agents in the US. Take the time to vet your options before making your choice.
Look for someone who has a finger on the pulse for real estate in your area, too. Make sure they can offer you helpful buyers’ resources. They can help you accomplish your goals.
6. Skipping the Inspection
As you review your options for homes, make sure to schedule an inspection. Otherwise, you might not realize the real price of buying that home.
A home inspection will help you find the major issues with a property. You can determine how much you’ll need to pay to fix those issues, too.
Without an inspection, you might not realize issues like water damage, cracked pipes, or structural issues.
Make sure to request a home inspection when you make an offer on the home. Include a contingency, too. A contingency will ensure you have a penalty-free escape plan if there are major problems.
The seller might fix the problems before closing, helping you avoid potential costs down the road.
7. Failing to Compare Loan Estimates
Your lender will need to provide a closing disclosure before your closing date. This document reviews the exact costs you’re expected to pay. These costs can include:
- Closing costs
- The down payment
- Loan details and terms
Make sure to compare this document against the initial loan estimate you received. Make sure the lender isn’t charging extra fees.
These are also known as junk fees. If certain fees are more than anticipated, talk to your lender. Make sure you understand every expense.
Otherwise, you might have to push your closing back to make sure the paperwork is corrected and accurate.
Enjoy Home, Sweet Home: 7 Home Buyer Errors to Avoid This Year
Don’t rush to put a down payment on a home without developing your home shopping strategy. Make sure to avoid these seven home buyer errors while you’re at it. Avoiding these common mistakes can help you dodge buyer’s remorse.
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