Financial Mistakes to Avoid When Buying a Home

Friday, September 14, 2012

Financial Mistakes to Avoid When Buying a Home

Buying a home is a serious and the process of buying it should be done properly. However, most people commit a lot of financial mistakes when buying a home for the first time. They often do not know the right way to get hold of the real estate market, and they end up spending more rather than saving the excess money and putting it to good use. Here are some of the most common mistakes that most people commit when buying a home.

  •        A lot of people go into a homeownership without even understanding the implications that go along with it.  Don’t let the market fool you; even if the market conditions are in good shape, it is not a sign that you’re ready to become a homeowner. If you are renting a home, the first thing you should do is to check the house for lease agreements. That way, you’ll be able to know about the conditions of termination and other important things. Being a homeowner is no easy task, you have to pay for all the payments on time all the time, you are responsible for all the repairs etc. If you have an unstable income and you don’t think you can cover all of these, they you are not ready for home ownership.

  •   It is important to get pre-approved first. Skipping this step may have your buying dreams shattered in an instant. Remember that your pre-approval will be based on your gross household income, your down payment, your credit score and the annual credit report and assets. There are online mortgage calculators to help you with this one.

  •          Never underestimate the costs that go with buying a home. There are other hidden costs and even closing the deal will have you spending 2 to 5% of the home purchase price. You also have to consider lawyer fees, home inspection, tax return, insurance, and moving expenses.

  •        Overlooking the resale value of your home is another mistake that people commit all the time. You will never know when you’re going to move to another house that’s why it’s important to know its resale value. Look at the house objectively and put yourself in other home buyers’ shoes, would it fit their needs? Will other home buyers be able to afford the price?

  •          This may be the easiest thing that a lot of home buyers forget. Just by taking you time shopping around for the best mortgage, you can save a lot of money in the long run. Shopping around will give the possible lowest and the best mortgage present in the market. Don’t settle for a very high interest rate all at once.

The key is to always do a lot of research in the real estate market before purchasing your dream home. Avoid overspending and worrying about future issues by following these tips and get the best mortgage for your home. Don’t forget about your credit score as well.

Author’s Bio:

Joy Mali is a financial blogger who shares her views and suggestions on topics such as credit scores regularly.

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