Looking for your dream home is tricky. Especially if you’ve never been through the home buying process before, it can be easy to make missteps or to get caught up in small details that really don’t make much difference. With that in mind, we’re here to help. We’ve pointed out four of the most common house hunting mistakes, as well as how to avoid them. Keep reading to make sure you stay on track.
Getting a pre-approval should be every buyer’s first step toward buying a home. This document, which comes in the form of a letter from the mortgage company, will tell you how much money you’ll be able to receive in a loan. It’s crucial in helping you set your own budget, as well as showing sellers that you’re serious about buying their home. You’ll include a copy of the letter with every offer you submit in order to prove you’re financially fit to purchase the property.
The Fix: Go see a lender before you even talk to a real estate agent. He or she can help you figure out how much of a loan you can be approved for as-is and, if needed, assist you in figuring out what steps to take to improve your financials and increase your loan amount. Once you have a satisfactory pre-approval in hand, then you can start shopping.
Mistake: Forgetting to set your own budget
While a pre-approval is a necessary tool to have, it should not be the only detail that factors into setting your house hunting budget. Remember, the pre-approval shows the maximum amount that you’ll be given in a loan. You don’t have to spend that much, though, and you probably shouldn’t. You need to make sure that you’ll be able to handle your mortgage payment on top of your other recurring monthly expenses.
The Fix: Make your own budget – and stick to it. You can start by using a mortgage calculator to estimate what your monthly payment could look like at a variety of loan amounts. Then, when you find a point where you feel comfortable, work that figure into your monthly budget to make sure it makes sense when combined with the rest of your expenses.