15 Mistakes to Avoid When Buying a Home
15 Mistakes to Avoid When Buying a Home
Steer clear of these blunders
Buying a home is a huge undertaking. If you're new to the process, here are a few big pitfalls it really pays to steer clear of.
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1. Taking on too large a mortgage
Buying too expensive a home could really strain your budget and make your mortgage difficult to keep up with. A good idea is to use a mortgage calculator before you embark on your home search to get a sense of what you can afford. As a general rule, you should aim to keep your total housing costs to 30% of your income or less.
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2. Not getting pre-approved for a home loan
Getting pre-approved for a mortgage will help you determine how much money you can qualify to borrow. And that way, you won't waste your time looking at homes that are out of your price range.
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3. Letting your real estate agent pressure you
Real estate agents don't make money unless you purchase or sell a home, but if yours tries to push you to buy a home that's not right for you, push back. You're the one who has to live in that home and pay for it, so make sure it's a good fit logistically and financially.
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4. Accepting the first mortgage offer you get
If you're a strong mortgage candidate, you may have an easy time getting a home loan. But don't just go ahead with the first loan offer you get. Instead, shop around with different lenders. You may find that one offers a more competitive interest rate or lower closing costs than another.
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5. Forgetting about property taxes
It's not just your mortgage you'll need to pay every month once you buy a home. You'll also need to cover your property taxes. Make sure you know what your property tax bill looks like before moving forward with a home purchase, and remember that taxes can easily go up over time.
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As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.
But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.
That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.
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6. Not budgeting for maintenance and repairs
When you rent a home, your landlord takes care of upkeep and repairs. When you own a home, those costs are on you. Make sure you can afford them before buying.
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7. Ignoring your home inspection
A home inspection may reveal problems with the property you're looking to buy. If you ignore those issues because you're in love with a particular home, you could end up on the hook for costly repairs shortly after you move in. Instead, take those issues to heart and try negotiating with your seller to address them before you close on the sale.
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8. Waiving your home inspection altogether
In today's tight housing market, some buyers are waiving home inspections. That's a bad idea. Even if the home you're buying is fairly new, it could have its share of problems, so bring in a professional to do a thorough assessment.
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9. Making too low a down payment
Some mortgage lenders will let you put down less than 20% on a home, but if you go that route, you'll be hit with private mortgage insurance, or PMI. That's an extra monthly expense you'll need to bear, so you're better off avoiding it -- even if it means waiting a bit longer to buy so you can save up more of a down payment.
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10. Making too high a down payment
While it's a good idea to make at least a 20% down payment on your home, mortgage rates are pretty low right now, which means you can borrow in an affordable manner. Therefore, you may not want to put down much more than 20%. If you make a 50% down payment, you'll lower your monthly mortgage costs, but you'll also tie up a lot of money you may want or need for other things.
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As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.
But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.
That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.
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11. Buying a home that's too small for your family
Housing inventory is limited in today's market, so you may have to compromise on certain features. But one thing you shouldn't compromise on is space. If you're a family of five, a two-bedroom, one-bathroom home probably won't cut it, so be sure to find a home that offers enough square footage for you to live comfortably.
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12. Not researching local amenities
You may fall in love with a home based on its layout and features, but if it's not in the type of neighborhood you want to live in, then it's a bad buy. Make sure to do some research on local amenities before making an offer on a home. You don't want to get stuck with a home in a bad school district or in an area where there aren't many shops or parks.
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13. Not testing out the commute
If you work out of an office, you'll need to make sure the home you’re interested in buying allows for a decent commute. You might think you'll be fine based on mileage alone, but if the situation is such that you'll get stuck behind a series of school buses every morning just to get out of your immediate neighborhood, it may not be a great place to live.
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14. Choosing the wrong mortgage term
The shorter your mortgage repayment period, the less you'll spend on interest over the life of your loan. Thus, you may be tempted by the lower interest rate that comes with getting a 15-year mortgage, but if a higher monthly payment is a strain on your budget, then it's not worth it. Similarly, you may be tempted to get an adjustable-rate mortgage, but if you go that route, you’ll run the risk of your interest rate rising over time.
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15. Not pricing out renovations for a fixer-upper
A home that's in poor condition will generally cost less than an updated one. But before you purchase a fixer-upper, do some research to see what your renovations will entail. The last thing you want to do is get in over your head.
Our credit card expert uses this card, and it could earn you $1,148 (seriously)
As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.
But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.
That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.
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Be smart about buying a home
Buying a home is a huge undertaking, and one that will impact your finances tremendously. Do your best to avoid these home buyer mistakes so you don't regret your decision after the fact.
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