Buying a house is an exciting milestone in life but can also be daunting, especially for first-time homebuyers. The path to homeownership is full of pitfalls, and one wrong step could lead to a lifetime of regret. With so much at stake, educating yourself on the process and avoiding common mistakes that could cost you time, money, and your dream home is essential.
In this blog post, we’ll explore the problem of how easily homebuyers can stumble into serious missteps, even when they think they’re doing everything right. We’ll discuss the consequences of these mistakes, which range from financial loss to emotional distress. Finally, we’ll present the solution by unveiling our list of 23 things NOT to do when buying a house, helping you navigate the complex real estate world and secure the perfect home for you and your family.
So, strap in and get ready to discover the essential knowledge you need to make your home-buying journey successful!
1. Don’t buy a house unless you want to buy a house.
Buying a house is a major commitment.
Yet, it’s easy to think, “I just got a great job; I should buy a house,” or, “I just got married; it’s time to buy a house.”
If you feel pressured or rushed, back off and take the time to make sure it is the right decision. Don’t buy a house impulsively because it’s “the thing to do.”
Meanwhile, consider that you might want to buy a condo or a townhome; everyone’s life is different.
2. Don’t be unrealistic about your budget.
Your mortgage lender will tell you how much they can offer you. They will not tell you how much is reasonable to spend.
Although it can be tempting to stretch your budget to get the house of your dreams, be realistic about it.
If a bank OKs you for $3,000 a month, that doesn’t mean you can afford $3,000 a month. The bank doesn’t know the intricacies of your budget or your lifestyle.
3. Don’t buy a fixer-upper if you aren’t a fixer-upper.
Unless you have the skills and experience to address major repairs and renovations, don’t buy a house that needs much work.
Even if you are handy and confident in your abilities, there can be problems when you want to sell. Not all fixes add value to the home; many buyers prefer move-in-ready homes to homes tailored to individuals.
4. Don’t start looking without preapproval or prequalification.
Getting preliminary loan approval from a lender is one of the first steps to buying a house. It helps you know how much you can afford and reassures sellers that you are serious about buying.
Sellers often ignore offers from buyers who haven’t been preapproved, so make sure to get your mortgage in order before looking at homes. Applying for a mortgage early will also educate you on anything you need to change about your finances before purchasing a home.
5. Don’t make any major purchases when you’re buying a house.
When buying a house, avoid major purchases like furniture or appliances. All your credit activity is monitored while you are buying a house, and any large purchases can throw off your debt-to-income ratio, making it more difficult to get approved for a home loan.
You don’t need to close your existing credit accounts (in fact, you shouldn’t). But it would be best to freeze your credit so no new credit accounts can be opened.
6. Don’t miss any of your credit card or loan payments.
Your credit score is a major factor in determining how much house you can buy, and your payment history is the biggest component of that score.
Ensure all your bills are paid on time, even if it means setting up automated payments to help get the timing right. A single late payment could cost you hundreds or thousands over the life of the loan. It could even prevent your final loan approval if it kicks you down enough in terms of your credit score.
Even if you have a great credit history, missing a payment will often hurt your score a lot right when it happens. Since buying a house usually occurs under strict deadlines, that could be a problem.
7. Don’t quit your job or change jobs.
Another factor that lenders take into account when approving a mortgage is your job stability. Changing jobs or quitting during the home-buying process could disqualify you from final approval. It could lead to complications and delays even if it doesn’t outright disqualify you.
Most people know they shouldn’t quit their job when looking for a home. But even just switching jobs can make a difference, especially if you’ve moved into a different industry.
8. Don’t move money around
Another mistake people make when buying a house is moving money around without consulting their lender. If you move money from one bank account to another, it can raise red flags. Primarily, the lender will be concerned that you’re trying to hide the source of your down payment.
9. Don’t accept large sums of money from family and/or friends.
Avoid accepting large sums of money from family and friends. In some cases, lenders may question the source of these funds and ask for additional documentation.
It’s usually better to keep your financial transactions simple since lenders will dig through your bank statements. Your family can usually gift you a certain amount toward your home purchase, but it has to be well-documented.
10. Don’t forget to factor in extra costs like taxes and insurance.
Although it may not be immediately apparent, additional costs are associated with buying a house beyond the down payment and mortgage payments. Make sure you factor in property taxes, homeowners insurance, and other fees or expenses that could add up quickly.
Add everything you will pay for to your monthly payments and take a look at your budget. This will give you a better picture of whether everything is affordable. Even as you go through the purchasing process, you’ll have to pay for things like inspections, appraisals, and miscellaneous closing costs.
11. Don’t get stuck in a bidding war
When you find a house you love, it can be tempting to enter a bidding war with other buyers. But don’t let emotions take over and drive up the price. Be realistic about what you’ll pay for the home, and stick to your budget. When you make an offer on the house, you should have a firm number in your mind.
12. Don’t take the first mortgage offer you receive
Take the time to shop around and compare offers from different mortgage lenders. You can save a lot of money by finding the best mortgage rate and terms for your situation, so don’t be afraid to negotiate and do your research.
You can negotiate a conventional mortgage simply by telling a lender what your monthly mortgage payment would be with another lender. From there, the ball’s in their court regarding whether they want to match the other lender’s fees and interest.
13. Don’t be afraid to “waste your agent’s time.”
What happens when you start purchasing a house you don’t want just because it’s the 14th house you’ve seen?
Frequently, you pull out anyway. You lose your earnest money and must start from square one. Don’t try to buy a house you aren’t in love with or can’t see yourself growing to love. The deal will likely fall through before the end.
14. Don’t get too picky
There are things you can change, and there are things you can’t. Don’t turn down a house because of its paint color: You can change that. But do turn down a house because of foundation problems: That will be harder to fix. Knowing what you can and can’t change is half the journey.
15. Don’t stalk the houses you’ve lost
It’s a competitive market. After a bidding war or an offer falls through, it is easy to wonder what happened. But focusing on finding your next home is more important than worrying about the one that got away.
Don’t just keep refreshing the listings you’ve lost, hoping they may return to the market. If you want a second chance, ask your real estate agent to notify you if the sale falls through. The seller will likely be calling you.
16. Don’t waive all your contingencies
When making an offer, it’s important to include contingencies that protect you in case something goes wrong. These contingencies can include the inspection, the appraisal, financing, and more. Don’t waive all of these contingencies just because the seller is asking for them; make sure you understand what risks you’re taking before signing on the dotted line.
In some areas, there’s such a competitive market that contingencies practically have to be waived. But your agent will explain which contingencies must be waived and which you should keep.
17. Don’t get wrapped up in FOMO.
Don’t let Fear Of Missing Out (FOMO) drive you to make rash decisions. Specifically, if you are trying to buy a house because you’re afraid it’s the last one available, you need to take a step back and consider what you want. It will be worse to buy a house you don’t love and have to sell it than to wait to get a house you truly like.
18. Don’t bid beyond realistic appraisal
If a house doesn’t appraise, the mortgage won’t close. Most loan programs will only close for a certain percentage of the property’s appraised value.
The market and its condition determine a home’s appraisal value; it doesn’t matter what you think it is worth. If the house doesn’t appraise, you must cover the difference (assuming you still want the property). Make sure you have that cash at hand.
19. Don’t spend all your cash reserves
You’ll need some of it for things like moving, furniture and fixing anything wrong with the house. Don’t deplete all of your savings just for the down payment. Having a cushion to cover any unexpected expenses is important. If it’s a choice between putting down a bigger down payment and having a reserve for maintenance, keep the reserve.
20. Don’t skip the home inspection
This is one of the most important steps in buying a house. Your home inspector will check for any defects or issues that could be costly repairs down the line. Ensure you hire a reputable home inspector, and don’t be afraid to ask questions or raise concerns during the process.
Your agent should help you get the house repaired, within reason, following the inspection, and before the purchase. Even f you’ve waived the right to a home inspection, having one is important; it tells you what to fix.
21. Don’t skip the title insurance
Title insurance covers you if any legal disputes arise concerning the title to your home. It’s important to ensure you’re purchasing property without unresolved liens or judgments against it.
Title insurance is typically recommended by real estate experts and can give you peace of mind in the long run. This is one of those things you probably won’t need, but if you do, you need it.
22. Don’t wire money without verbal confirmation
Never wire money to a seller or lender without verbal confirmation. If someone asks you to do this, it could be a red flag that something is wrong. Ensure you always get verbal confirmation from the other party before sending money through an electronic transfer. There are a lot of scams that depend on targeting homebuyers to get them to wire money to a fraudulent account. Once the money has been sent, it’s virtually always gone.
23. And above all: Don’t panic
Buying a house is a big step, and it can be overwhelming. Take your time, do your homework, and ensure you’re making an informed decision. Don’t let yourself get too overwhelmed by the process; it’s natural to feel anxious but try to stay level-headed and remember that there are always more options.
Conclusion: House hunting should be fun, not stressful
Knowing what not to do when buying a house can help you stay organized and on track throughout the home-buying journey. Don’t waive all your contingencies, don’t get wrapped up in FOMO, don’t bid beyond realistic appraisal, don’t skip the home inspection, and (of course) always listen to your real estate agent.
Houses aren’t going to go away forever. If you’re not finding what you need in the market, it’s possible you need to take a step back and strategize with your agent. It’s always best to get into the market as early as possible, but it’s not a good idea to buy a house you ultimately don’t desire.
When buying a house, you should avoid any major financial decisions. Do not quit your job, don’t run up debt, and don’t be late on your credit cards. You need to protect both your income and your credit score.
Before closing on a house, avoid taking out or changing any loans or credit cards. You should also avoid making large purchases, as this could affect your debt-to-income ratio and the eligibility for your mortgage loan.
Before buying a house, it’s important to understand the difference between pre-approval and prequalification. Pre-approval is typically stronger than prequalification and gives you more assurance when making an offer on a home. It’s also important to get all the facts before signing any paperwork; make sure you know.