“Buyers remorse” may be an inevitable cost of the modern world, but there’s no reason it has to come attached to a 30-year mortgage.
Buying a house for the first time can be an incredibly stressful and confusing experience. However, with a little bit of research plus a Realtor, mortgage lender, or another experienced real estate professional by your side, you can ensure your first home will be a source of joy.
Here are ten tips to help you on your way.
- Don’t get emotionally attached
A house is likely the most expensive thing you’ll ever buy. So, “calm, cool, and collected” are the watchwords of the day. No matter how amazing you feel the house you’re looking at is, there’s always another one just as amazing right around the corner.
- Don’t DIY your search
Trulia, Zillow, Craigslist: There’s no shortage of resources for homebuyers on the hunt, but it makes sense to work with a real estate agent. Agents have access to homes that aren’t yet listed; they can get you in touch with reputable inspectors and contractors, and make sure there aren’t any clauses or riders in the contract you’ll end up regretting.
- Don’t deal with the listing agent on your own
Remember: The listing agent is the home sellers representative, and their job is to get the best deal for their client, not you.
- Don’t forget there’s more than just the down payment
Closing costs, property taxes, movers fees, new appliances. There are a lot more costs involved in moving into a home than just the 3, 5, or 20% down. A good rule of thumb is to budget two or three mortgage payments for all of the extras.
- Don’t forget there’s more than just the mortgage and property taxes.
The complement to the tip above. Higher utility bills come with the greater square footage of a house. Plus, now you’re likely also paying for things like water, sewer, and garbage; homeowners insurance costs more than renters; PMI—it can all add up to a few hundred extra dollars a month.
- Don’t skip getting pre-approved for a loan
You may know what you can afford, but the home seller is going to need proof before they’ll want to deal with you. A pre-approval letter (essentially a proof of income and assets) can be had from a lender in under a week. Take the time and get it done.
- Don’t pass on a home inspection
We get it. You love the home you’re looking at, and the last thing you want is a reason not to buy it. But consider these two little words: money pit. An inspector can spot the very costly, non-obvious problems that might escape a non-professional’s eye.
- Don’t take out a new loan before you close
- You found your dream house? (Yep.)
- Your bid was accepted? (Yep.)
- As soon as escrow closes you can move in? (Yep.)
- So, naturally, it’s time to open up a new credit card or apply for an equity loan to start buying a bunch of cool, new stuff to put in your house. (Nope! Nope! Nope!)
Before you close, a mortgage lender will pull your credit report to make sure there are no last minute negatives in your finances. Even if you can afford it, wait until after you move in to start shopping.
- Don’t assume your credit score is correct
Sad, but true: tens of millions of credit reports have inaccurate information. Maybe it’s a harmless typo, but maybe it’s a red flag on a credit card you never opened, or a loan you never missed a payment on except the report thinks you did. Mistakes like these can increase your interest rate and cost you tens of thousands of dollars over the life of your loan.
Check your credit score three or four months before you start your search. That way, if there’s anything that needs to be addressed, you’ll have time to get it fixed.
- Don’t assume “My Property. My Rules.”
Different communities, cities, HOAs, etc. have different rules for what homeowners can and can’t do. Most of them are quite sensible, but some of them are less so. Review all deed restrictions to make sure that awesome red front door (so feng shui) isn’t going to run afoul of some ordinance.
Homeownership offers an incredible opportunity for financial independence. Don’t let a few easily avoidable mistakes turn it into a hardship. Answer a few questions here, and a home lending expert will contact you!