There are many mistakes we can make when buying a home. Some of them are small and relatively easy to fix. Others can have a catastrophic impact on us emotionally, psychologically, physically, and financially. These mistakes can have repercussions for years to come. Fortunately, most of the common mistakes to avoid when buying a house are somewhere in the middle ground. Let me walk you through the gaffs, bad calls, and misguided mistakes people make, and how you can avoid them.
What are the common mistakes to avoid when buying a house? Common mistakes to avoid when buying a house are centered around; a lack of knowledge or experience, insufficient planning, going ahead with the next step in the process before you are ready, not paying enough attention to detail, miscalculating your finances, and letting emotions rule your head.
By arming yourself with knowledge before you take your first step, the home buying process can be a less stressful and more enjoyable journey for all concerned. You may believe you have it all covered, but I’m betting even the most experienced home buyer will be guilty of making some of these mistakes.
Common Mistakes To Avoid When Buying A House
The thing is, none of us are immune to make these mistakes. You are buying something that is both a house and a home, and in this case, common sense and emotion are often fighting it out for supremacy. On top of that, you are making your way through a minefield of decisions where one wrong step can blow-up in your face.
To make it a little easier I have broken the common mistakes to avoid when buying a house into these categories:
- Before You Even Begin Planning To Buy A House
- Before You Start Looking At Homes
- When You Are House Hunting
- When You Find “The One”
- Falling At The Last Hurdle
Before You Even Begin Planning To Buy A House
It sounds bizarre, getting ready to plan to buy a house. However, many people make the mistake of thinking they need to prepare when they are on the cusp of house hunting. This is not true.
For example. Say you decided to run a marathon before your next big birthday, but you were really out of shape. You’d begin by eating healthily and getting fitter. Then you’d start running, building up to longer distances. Eventually, you’d be ready for the race. You wouldn’t sit on the sofa eating chips until a couple of weeks beforehand and then begin training.
It’s the same for buying a house. Before you even begin the house hunting process, you have to do your best to ensure you are in the best financial shape possible.
These are the common mistakes to avoid when preparing to buy a house.
1. Missing Loan, Credit Card Or Other Payments
It is crucial that as soon as you think you might want to buy a home of your own in the future, that you start working on your financial health. The first step to doing this is to ensure all of your credit cards, any loans, utility bills, etc. are paid on time. Your credit report can show three years of payment history and if there are a lot of missed, or late payments you might not get a mortgage offer. This is true even if you were having money troubles a couple of years ago but are stable at the time of the mortgage application.
2. Not Checking Your Credit Report With All Three Companies, Or At All
Even if you have never made a late payment, defaulted on a loan, or made any other financial misstep, it is essential to check your credit report and to do it with all agencies. Mistakes can be made and plenty of people have lost the home they were wanting to buy because their credit report came back with a huge red flag and it took them ages to correct the error.
3. Consolidating debt To Help Your Credit Score
For some people, debt consolidation is an excellent move, but be careful. Unexpected fees and variable interest rates can mean you are no better, or even worse off. In addition, if you have a bad credit score with issues going back years, then this move will not do much to help you for some time.
4. Helping Someone Out By Co-Signing Or Being A Guarantor
Yes, this is a kind, helpful thing to do, and you may be happy you will never have to pay out a dime. You might be right. However, lenders will take into account the fact that you are responsible for these items and use that information to determine your eligibility and size of a loan.
5. Failing To Develop A Long Term Financial Plan
Yes, I know, financial planning seems like something only people with money to spare for investing do. Not true. In order to comfortably afford the house you want in the future, you have to start planning today. This doesn’t necessarily mean going to an advisor. It could be as simple as sitting down, working out how much you have coming in, how much you will need by date X, and what you need to achieve that.
Believe me; it is much easier to save a little every month for five years than to try and save a great deal, every month in two years.
6. Not Saving For A Decent Sized Deposit
Just because you can buy a house with a relatively small deposit doesn’t mean you should. The bigger your deposit you have available, the more modest the mortgage you can get. That will save you a decent chunk of change in the long run.
7. Forgetting To Save For Other Costs
Not only do you want to put aside enough for a good deposit you should also begin saving asap for closing costs, moving costs, and any “can’t wait” repairs to your new home.
8. Aiming For Too Much Too Soon
One of the most common mistakes to avoid when buying a house is trying to buy too much house, too quickly. It is easy to put your income into a mortgage calculator and decide that is how much you will spend on your home. However, the biggest house you can afford is not always your best bet. When you are setting out your long term plan try to aim for the middle ground and save for the house you need instead of the for which you will be stretching every last dollar for the next 25 years.
9. Buying A House During A Major Life Change
If you know you are expecting to celebrate a graduation, get married, change jobs, even if it a promotion, in the next few years, don’t plan to buy a house at the same time. Not only will it place additional stress on you, but the financial upheaval and large expenses will be red flags for potential lenders.
10. Job Hopping
You may be confident of your ability to chop and change jobs at the drop of a hat, but lenders will see a history of chopping and changing roles as a sign you are at best inconsistent and fickle and at worst, such a bad employee you can’t hang onto a job and therefore cannot rely on steady income.
11. Before You Start Looking At Homes
You made your long term plan and now the time when you’re going to take the big step and buy a house is approaching.
Don’t start making appointments to view houses just yet though. Before you even consider firing up your laptop and browsing for your next home, make sure you do not make any of these common mistakes to avoid when buying a home.
12. Not Understanding The Roles Of The Professionals
There is a dizzying array of people involved in looking for, finding, and purchasing a house. These include:
- Real Estate Agents
- Real Estate Brokers
- Loan Officers
- Mortgage Brokers
- Mortgage Underwriters
- Home Inspectors
To name but a few. It is critical to know and understand the role each of the professionals you encounter has in the house buying process. Without this understanding, it is easy to have unrealistic expectations or an avoidable mistake.
13. Failing To Interview Multiple Real Estate Agents
You will be spending a considerable amount of time either in person or communicating with your real estate agent, so you have to make sure you get along with and have trust in your choice of professional. In addition, you need to ensure you sign up with a professional, ethical real estate agent who will advise you well and keep your best interests at the forefront. To do this you need to interview a number of real estate agents and pick the one best suited to you.
14. Deciding To Go Solo
A surprisingly large number of home buyers make this common mistake when buying a house. They think that they will be fine browsing online, setting up appointments, negotiating a deal and signing off without the support of a professional.
Don’t do it.
Not only do real estate agents have a wider pool of properties from which to choose than you could ever find yourself, but they will make suggestions about what you need and don’t need and show you houses you might have never considered.
On top of that a real estate agent knows what background information to check, the elements of the sale that can be problematic, provides recommendations for home inspectors, etc. and can help you in ways you never imagined, right through to the point where you put the key in the lock of your new home.
15. Not Being Entirely Truthful With Your Real Estate Agent
People can hide or stretch the truth for a variety of reasons. They are not always being dishonest in an attempt to make a personal gain. A prospective house buyer can hold back information because they:
- Do not have confidence in their advisor.
- Are embarrassed and fear they will be looked upon poorly.
- Don’t trust the person to whom they are speaking to keep their information confidential.
- Believe they know better than the professionals.
- Do not think something is important enough to mention.
Trust me. If you are working with an experienced real estate agent, there is little you could tell them that they haven’t heard before. By not being truthful you are potentially setting yourself up for more significant problems later on.
16. Lying Or Stretching The Truth On A Loan Application
It is natural to try and make yourself sound as financially secure as possible when you are filling out your loan application. For example, an applicant might put that their paycheck is $2,000, but in reality, it is $1500 plus tips and the $2,000 figure was just last month. However.
Lying On A Loan Application Is Fraud.
It Can Have Legal Repercussions.
You Could Have Your Loan Recalled, Lose Your Home At Any Point During The Term Of The Mortgage, Even Face Jailtime
Do not even attempt to stretch the truth. It is not worth it.
17. Just Considering Mortgage Payments
Many house hunters calculate how much they can afford purely by considering their current wage and the mortgage repayments they will have to make. This is a huge mistake.
Owning a house costs so much more than your monthly mortgage payment. As well as utility bills you will have property taxes, repairs and maintenance, possibly condo fees or homeowner association fees, home insurance, life insurance, the list goes on.
When you are calculating what you can afford, don’t forget to factor in other regular costs.
18. Failing To Research Mortgage Providers
Many would-be homeowners simply ask the institution with which they do their regular banking for a mortgage. The theory is that they know you and will be more likely to approve you. This is untrue. You will be assessed in the same way as somebody who walked in off of the street.
Not only that but some lenders are known to be more flexible than others if you should run into difficulty down the road. By simply signing up with your existing bank you could be committing yourself to a company that takes a hard line and is inflexible.
19. Ignoring Special Loan Programs
There are a number of government loan programs which can help a first-time buyer get their foot on the first rung of the property ladder. Many potential buyers either do not know about this programs, assume they do not qualify, or simply do not bother to investigate them.
Include these programs in your mortgage research:
- VA loans. These mortgages have the backing of the Department of Veterans Affairs who guarantee the loan. They are exclusively for those who have served in the US military. Instead of mortgage insurance, borrowers pay a “funding fee” and can even get 100% financing with $0 down payment.
- FHA loans. The Federal Housing Commission administers these loans, and they allow for down payments that are as small as 3.5%. They are also fairly forgiving for those that have an imperfect credit history. The drawback to these loans is that they require mortgage insurance for the life of the mortgage, not just until you have over 20% equity.
- USDA loans. Provided by the US Department of Agriculture, these loans are available for homes which are in areas designated as rural by the department. Instead of mortgage insurance, you pay a one-off guarantee fee and make an annual payment. These mortgages are also available at up to 100% financing.
20. Not Shopping Around For The Best Mortgage For You
Despite what you might think, the interest rate offered by the lender is not the be-all and end-all of mortgage shopping criteria. Lenders have ways of dropping the interest rate and making up for it elsewhere in fees or other costs.
For instance. A slightly higher interest rate for a fixed term enables you to set your monthly budget without any fear of your payment going up. This could be worth more to you than a lower rate today that could become a much higher rate tomorrow.
Take the time to interview loan officers, obtain quotes and carefully compare each possibility before committing yourself.
21. Failing To Obtain A Pre Approval
Do not rely on an internet mortgage calculator to tell you how much the bank will be willing to lend you. Not even the banks own calculators. These are designed to give you a ballpark figure and are best used in the earlier stages of planning.
By failing to obtain a pre-approval not only do you risk a long, extended application process during which your seller could go elsewhere, but you also risk being offered a loan which is considerably smaller than you expected.
Not only that but having a preapproval might give you the edge over another potential buyer who doesn’t have one. By showing the seller, you are preapproved they can have more confidence in your ability to complete the sale.
22. Making Large Deposits At The Bank
Lenders will be suspicious if they see a sudden large amount of money landed in your account just a month or two ago. If this happens, you may have to jump through hoops to prove where it came from. This is because lenders are fearful you may have taken out a loan for your down payment.
23. Ignoring Points Because You Don’t Understand Them
Points are basically fees that you can pay at the beginning of your mortgage in return for a reduction in your interest rate. Over the life of the mortgage, this can save you thousands of dollars.
Many buyers miss this opportunity because they do not understand the savings they could make in the long term.
Up until this point most of our advice has been about finances but let’s not forget the human element. While in some ways every mistake has financial implications these are the “non-financial” common mistakes to avoid when buying a house. Let’s not forget, not only are you, buyer, a house, you are purchasing a home.
24. Failing To Consider The Families Needs
Many people go house hunting without much thought to the impact the new home will have on the peripheral areas of their life. You’ll probably look at schools but would you consider things like:
- Is there a park nearby that the kids can enjoy?
- Are the stores within a comfortable walking distance?
- Where will we walk the dog?
- Are there convenient transit links for everyone?
- Will the neighborhood still work for us all in five years?
These are, in themselves, small considerations but it is surprising what can crop up and become an annoying inconvenience in your new home.
25. Not Staking Out The Neighborhood
Similar to, but not quite the same as the last point, many people look at a house in the middle of the day, mid-week, and give little thought to what might go on there at other times. Visit your target neighborhood at different times of the day and night, both during the week and at weekends.
You will also want to check out crime levels, scheduled improvements and any up and coming zoning changes that may be in the pipeline.
All of the above are must do’s in you are considering a purchasing a rental property for investment purposes.
26. Once You Are House Hunting
Now, finally, you are ready to go house hunting but, yep, you guessed it, there are plenty more common mistakes to avoid at this stage of the house buying process.
27. Not Keeping Records
When you attend a viewing, make sure you keep a record of the property details, when you went to see it and the plus and minus points. If you are sensible enough to view plenty of homes, they may start to all blur into one and having notes, or better yet taking photos as you view, will help you in two ways.
- You will be able to remember, for example, if the house with the shaker style kitchen cabinets was the one with the open plan floor plan.
- You can refresh your memory and take a better look at some of the details that might have flown by you during the viewing.
Yes, you can always go back to the listing, but those listing photos show the house in the best light. Your candid shots will be much more reflective of reality.
28. Having Too Many Non-Negotiables
Too many house hunters write themselves a “must have” list, on which they are not prepared to budge. I know of buyers who turn down properties over issues that are purely cosmetic, or very easily resolved because they have a picture of their ideal home in mind.
For example, if you want an open plan ground floor and the house doesn’t have one, but otherwise ticks all of your boxes, weigh up how much time and effort and cost there would be involved in a reno against how likely you are to find a perfect house.
When you are willing to compromise you just might find that dream home after all.
29. Not Being Open To Suggestions
In a similar point to the one above, many house hunters tell their real estate agents that they only want to see a particular type of home or a house in a specific part of town. There may be reasons for this, school catchment areas are often cited, but you should consider looking at properties outside of your specifications.
A friend of mine lives in a spectacular modern house that she fell in love with after telling her agent she only wanted an old home with character. You never know what you might love unless you are open to suggestions.
30. Not Browsing Plenty Of Homes
The house hunting process can be just as much about finding what you don’t want as seeing what you do. By looking at plenty of homes, you will get a good feel for what is available, how much in the way of housing stock is currently available and the kind of house or feature you don’t like.
31. Being influenced by “The Market.”
Some people leap into buying a house because they have heard that prices are on the rise or the market is getting tighter, with lower levels of housing stock. Equally, others have passed up the opportunity to purchase a lovely home because they are waiting for prices to fall in order to get a better deal.
Buy when the time is right for you, don’t try to predict the unpredictable housing market.
32. Going To The Top Of Your Budget
It is tempting to look at homes at the top end of your budget and ignore other properties that cost less. Yes, the most expensive properties in your price range can be the most appealing but don’t stretch yourself too far. That extra bedroom you don’t need, or the two car garage you didn’t know you could afford may be tempting, but you would be better off choosing something without the extras and saving your money.
33. Falling in love
Yes, sometimes you walk into a house and feel like this is the one you have been waiting for. This in itself is not a bad thing, but letting your emotions take the reins when buying a home can lead to disaster.
Too many buyers pay way over the top for much less than they thought they were getting because they let their hearts rule their heads. You wouldn’t agree to marry someone ten minutes into a first date, don’t commit to what appears to be your dream house too quickly either.
34. Showing The Love
Try not to let your face light up with joy the moment you step foot over the threshold. Agents are experts at reading people, although it doesn’t take much to decode a buyer squeezing their partners arm and saying “I love it, this is the one.”
As soon as the seller and their agent know that you adore the house, it gives them a much stronger negotiating position. You are far less likely to get any concessions from them if they are confident you’re not going to walk away from the deal.
35. When You Have Found “The One”
It may feel like everything is done and dusted when you have found the home you wish to buy. Unfortunately, there are still plenty of common mistakes to avoid when buying a house, even at this stage. Ensuring you are purchasing the right home and getting the best deal you can require time, attention to detail, research, and sometimes nerves of steel. However, by avoiding these next mistakes, you will put yourself in the best possible situation for success.
36. Not Considering The Future Property Taxes
You might have factored in the current property tax, but have you considered the future? Property taxes are usually reassessed, based on the price you have paid for the home, and on some occasions, the increase can be significant. This is especially true if the current owner bought a rundown wreck and turned it into the palace of your dreams.
Investigate the tax levels in the area, ask if the rate is likely to rise and recalculate your finances.
37. Forgetting To Check Zoning Regulations And Permitting Restrictions
Most issues that might affect your use of the home are caught in the purchasing process. However, it is still worth doing this yourself. I have a relative that bought a rundown cottage on a vast, overgrown lot and was happy that they would be allowed to reno how they wanted.
It turned out that the next door neighbor had a protected tree in their garden and the root system was partially in my relative’s yard. They managed to get what they wanted to be done in the end but it took many, many months of bureaucracy and a fair amount of money to get there.
38. Forgetting To Check Neighborhood Zoning Regulations And Permit Applications
A check on the zoning regulations is part of the appraisal process, so it is unlikely, although not entirely impossible that the building itself is not compliant with the zoning. What you do need to check is any special regulations and zoning of neighboring properties, and neighborhoods.
Adjacent neighbors, and neighborhoods can have a significant impact on your enjoyment of your home, so it is sensible to ensure that they are not going to change anytime soon unless you want them to of course. By checking zoning regs you will have an idea of what could happen and a review of issued and applied for permits, will give you an idea of imminent changes.
39. Failing To Consider Resale Value
Even if you are planning for the house of your dreams to be your forever home, it is worth considering the resale value. However, if you are likely to move again in the next few years, then it is critical.
While nobody can say for sure how the market will behave, there are indicators of whether or not a property might increase or decrease in value. For example, likely to increase in value are:
- A bad house in a good neighborhood, especially if you are planning to upgrade it.
- Small houses on large lots where there is the potential of expanding the living area.
- Properties in areas slated for development
Most likely to decrease in value are:
- The biggest, best-looking house on a rough block
- Homes where there is no opportunity for expansion or renovation.
- Properties in neighborhoods that have been popular but are becoming less so.
40. Mistaking Cost For Value
You will hear about market value and appraised value when you are house hunting. Market value is purely how much someone is prepared to pay and is not reflective of the cost of rebuilding or buying a similar house in the area.
If you are paying $300,000 for a new house, this is the cost. Make sure that what you get is worth $300,000 and is not a $220,000 house with lipstick, in a market with low stock.
41. Waiting Too Long To Make An Offer
While it is sensible not to jump up and down and screech “I love it, let me give you lots of money” when you are with an agent it is equally unwise to wait too long before making an offer. Yes, take the time to give the home proper consideration, but don’t wait so long that somebody else snaps up your dream home.
42. Basing Your Offer On The Sellers Asking Price
When you consider what to offer for a home think about what you can comfortably afford, what type of house is right for you, and how much those things are worth to you. Start considering what kind of offer you want to make from this perspective.
Too many people start with what the seller is asking for and work from there. Before you go to view a property ask your buyers agent to send you a comparative market analysis. This will detail the asking and sales price of similar houses that have been sold recently in the neighborhood.
43. Making A Bad Offer
Lots of buyers make the mistake of believing sellers will sell their home, no matter what, and that it worth throwing out a lowball offer, or one with lots of conditions. The theory being that you can always up your offer or negotiate in some way.
While plenty of sellers will seriously consider all offers and be happy to enter into the counter offer tango, many are not. There are sellers who will wait for the price they are asking, or something close to it. There are basically four possible responses to a lousy offer.
- The seller will merely ignore your offer and refuse to consider any other offers from you.
- The seller will ignore your offer but would be willing to look at another offer from you.
- Your offer is considered, and a counteroffer is made.
- The offer is accepted.
In only one of these scenarios do you end up with the house. If you are not worried about the possibility of losing the house to another buyer, then feel free to make whatever offer you like. If you feel strongly about getting the home, start with a reasonable offer.
It is tempting to believe that the seller’s agent is lying about other offers in order to panic you into offer top dollar for the property, but this is unlikely. People lose out to other buyers because they believe this and so still make a lowball offer regardless.
44. Negotiating Badly
Some people thrive on negotiating, but the majority of us find it stressful. However, this doesn’t mean that you shouldn’t try it. Just as making a bad, or insulting offer is a bad move, so can be saying yes to the asking price straight away.
Not only is there the possibility of saving money on the price of the property, but there are also other items on which you can negotiate.
45. Thinking It’s All About The House Price
In some cases, other elements of the contract can balance out any issues you have with the price of the home. For example, the seller may be willing to leave their top of the line appliances, agree to a closing date that suits you, pay your closing costs, the possibilities are endless.
46. Ignoring Your Real Estate Agents Advice
It is shocking to me how many people work with an experienced real estate agent and then blindly ignore all advice because they “know better”. Often this is a result of distrust and suspicion. Buyers worry that their offer may have been disclosed to other house hunters or that the agent is trying to earn themselves a better commission.
When you hire a real estate agent, ensure you find the right one for you and listen to them.
47. Blindly Following Advice
As with all things in life, there are two sides to everything and how to handle the advice from your real estate agent is one of them. While you should not just ignore them, or treat their guidance as self-serving, you shouldn’t get caught up in blindly following all advice either.
The best way to work with a professional is to take your time choosing the right person to work with and then, when they make a recommendation, talking it through.
Always ensure that you understand the why of their suggestions and not just the what.
48. Not Having Your Financing Ready
Yes, we’ve already pointed this out as a common mistake to avoid when buying a house, that was in the prep stage. It is worth reiterating it here, from the perspective of having found your dream home and making an offer.
If you have a flexible seller, who is in no hurry to get things done you might not have a problem. However, there are plenty of sellers who are either working to time constraints they cannot influence or who just want to get the sale done as quickly as possible.
When you are making an offer to a seller for whom as short a time scale as possible is necessary, not having your finances sorted could be the difference between buying your dream house or driving past in a few weeks and watching someone else moving in
49. Failing To Get The Clauses You Want In The Contract Of Sale
You might be told, by an agent, that you can ask for changes to the contract, or extensions in the timeline.
Don’t bet on it.
Once you have both signed the contract the only way to get changes made is for both you and the seller to agree to end the existing contract and draw up a new one. The seller is under no obligation to do this so ensure that everything you want is in the agreement you sign.
So, now is the time to ensure you have that clause that says you can back out of the sale if your loan falls through, or the inspection turns up enough issues to affect the value of the home.
50. Not Getting Everything The Seller Or Their Agent Says In Writing
Ok. Don’t panic; I’m not talking about long transcripts of entire conversations here. I am talking about those throwaway answers to your questions. You know the ones “Oh don’t worry, there’ll be no problem getting a permit to make those alterations” or “It’s not a load bearing wall, it’ll be fine to just knock that out and open up the entire space.”
If you ask a question and the validity of the answer is important and may impact your decision to buy, get that answer in writing as proof of what you were told.
51. Making An Offer To End The House Hunt
I understand. I’ve been there. You’ve been viewing houses for ages, and nothing is even close to what you are looking for. Oh, except those three houses you were outbid on of course. You are tired, fed-up, stressed, and sick of the whole process.
You think “That’s it, I’m done. I’ll make an offer on the “it will do I suppose” house”
Don’t do it.
Short term you will get a little relief after you have gotten past the purchasing of course, but long term you’ll find yourself living in a house called regret. No matter how bad it gets, don’t settle for an unsuitable home. If it’s that bad, and you do not have to move by a particular date, take a few weeks off from the hunt. If you do have time constraints, consider a short term rental while you find your new home.
52. Panic Buying
Being fed up isn’t the only way to buy the wrong property. There is also panic buying. It goes like this.
- You have been whipped up into a frenzy by the agents who have told you everything on the market gets sold in a matter of days so you mustn’t hesitate.
- Worry rears its ugly head, and you begin to think “What if I can’t get a house?”
- At the next viewing or open house, you are told “This one is going to be snapped up quickly.”
- The home isn’t really what you are looking for, and in a market, with plenty of houses available, you might not even have bothered going to look at it.
- You find yourself putting in an offer before you’ve made it halfway around the house because you are panicking that someone else will get there first.
To avoid this situation try to keep in mind your wants and needs, while not overthinking what any other buyers are doing. Only ever put in an offer when you have had time to consider it carefully and not when you haven’t even seen the upstairs yet.
53. Getting Caught Up In A Bidding War
Sometimes this is inevitable. If a house is perfect for you, the likelihood is that someone else will feel the same way. When several people put in an offer at the asking price, the seller might counter offer one or all of the potential buyers. These offers and counteroffers can go back and forth with each round upping the price.
If you are in this situation try to step back, take a breath, and consider your financial situation. It is easy to get caught up in offering “just another $1,000” in an attempt to win a house in a bidding war. Far too many buyers have found themselves caught up in the bidding, only to see they have overextended themselves.
Never exceed your upper limit. Not by a cent.
If you have reached your financial ceiling, you can always discuss with your agent, whether there are other conditions in the contract, such a quick completion date, that could win the prize.
54. Miscalculating Repair Or Renovation Times And Costs
If you are a fan of reno TV shows and the like, it’s possible you have become brainwashed into believing it’s quick and simple to throw up a new kitchen in a weekend all by yourself. Or something similar. Not so.
If you are considering a home on which you will be doing repairs or renovations, and you have no experience, get a number of estimates from at least three contractors. Too many home buyers think they can carry out a quick DIY fix, or get one estimate without considering it might be a low ball offer.
Another friend of mine thought they could easily landscape their own yard. Unfortunately, they knew nothing about what they were doing and ended up paying someone to undo their mess, then relandscape their yard.
55. Agreeing To Deed Restrictions, You Don’t Understand Or Don’t Like
These days it is not unusual for a house, a condo, or other property to come with deed restrictions, covenant, and other rules and regulations. These might be simple, and something you can live with such as not putting up a fence in your front yard, or they could be petty and restrictive.
- Restrictions on the paint colors you can use on the exterior of the home.
- A list of plants that may be planted in the yards. Only plants on the approved list are allowed.
- The covenant that said no more than one child per house and the owners were forced to move after an unexpected second addition came along.
- One homeowner’s association only allowed garage sales on one day of the year, and any resident’s participating had to wear khaki cargo shorts and a white polo shirt.
- There is an HOA in Florida which only allows the residents to put up storm shutter a maximum of 24 hours before the storm is forecast. They must also be taken down again within 24 hours of the storm ending
Even if the rules don’t sound too restrictive, take the time to consider whether or not they might interfere with your enjoyment of the property in the long term.
56. Falling At The Last Hurdle
Congratulations. You have planned well, done all of your due diligence, had your carefully crafted, under budget offer accepted. It’s all plain sailing from here on in, right? You have your pre-approval so you know you can get the mortgage so there’s just some paperwork and hanging about and you can book the mover. Right?
There are still plenty of common mistakes that can scupper your sale, even at this late stage.
57. Moving To A New Bank
Perhaps your current financial institution turned you down for a mortgage, so you want to take your business elsewhere. Or maybe you are trying to get ahead of the curve and are thinking of moving to a new bank close to your new home.
Hold Your Horses.
Your banking history is part of the equation lenders use to grant your pre-approval. Contrary to what you might think a lender does not do the checks for pre-approval, pause, and then take the process up again where they left off when you come back for your loan. When it comes to processing your actual loan, they will look again at all elements of that equation, with fresh eyes, from the beginning.
No matter what the explanation, a sudden change in your banking history can see that pre-approval yes turn to an actual loan no.
58. Buying Or Leasing A New Car, New Furniture Etc.
In the same way that changing your bank can upset the details used to grant your pre-approval, so to can other loans, leases and even using your credit card for a large purchase. Your loan is based in part on your credit obligations and debt load.
Loading up the car with new furniture, leasing a new set of wheels to impress your neighbors-to-be, or buying that 65 inch TV might be appealing, but wait until the deal is done or you may not have a deal at all.
The same goes for applying for other financing, be it a new credit card, or a student loan. Leave everything as it was when you applied for your pre-approval.
59. Working With The Wrong Professionals
While it is possible to take your time and interview plenty of real estate agents before you begin your house search, time can be of the essence one you are in the last stretch. Don’t let time constraints trip you up. Ensure your real estate agent asks the right questions about the appraiser, ask for recommendations when booking a building inspection. Keep on top off the details and only accept the best available professionals to work on your team.
60. Not Having A Professional Building Inspection
This one should go without saying, but it seems that an astonishing 37% of home buyers do not get an independent professional home inspection carried out on their soon-to-be house. The reason why not vary. It could be that:
- Buyers use the inspector suggested by the seller or their agent.
- The house is a new build.
- The buyer thinks they have the knowledge to do it themselves.
- A friend or relative completes an “inspection” because they know a bit about DIY
Unless you or your friend or relative are a currently licensed building inspector, leave it to the professionals. Just don’t use someone from the seller, who may not want to find any issues, and don’t make the mistake that a new house won’t have problems.
61. Adding Closing Costs To Your Mortgage
It may be tempting to roll your closing costs into your mortgage and use the money you had put aside for other things. Resist at all costs.
You will be adding thousands of dollars to your loan on which you will be paying interest for years, even decades to come. In addition, adding the closing costs can take the amount you are borrowing to over 80% of the value of the home. If this happens, you will also be paying mortgage insurance. For a short term gain, you will be paying out a significant amount of interest and adding an extra outgoing to your monthly bills.
62. Not Being Prepared For Closing
It can take approximately an hour to get through the closing meeting, sometimes longer. There will be plenty of paperwork to review and sign and the possibility of last-minute requests or issues.
Oh, and don’t turn up with a check from your regular home checkbook, it won’t close the deal. You will need a certified or cashier’s cheque in order to confirm the funds are there, are available, and to guarantee the check will be honored. The last thing you need is to have to stop, mid closing, and go to the bank for the right check.
There you have it. The 59 common mistakes to avoid when buying a house. Now go start planning.