Buying a home can be an exciting time in the lives of many people, especially the brand new home owners. While this is a great accomplishment and a fantastic experience, it’s also important to recognize that without the experience of having gone through the home buying process before, it’s easy to make a common mistake that can end up costing you a small fortune and bring you a lot of pain and frustration. Read on to find out about 5 common mistakes far too many home buyers make.
Skimping on the Down Payment
A general rule of thumb used to be that you needed 10% as a down payment. There are loans now that don’t require that. Those can be tempting, but that means far higher monthly payments as well as paying way too much money over the full life of the loan. Realistically you should at least shoot for 20% or more of the total amount as the down payment. This puts you in a much better long term position.
Watch Debt to Income Ratio
Watch out for student loans and car loans. The debt to income ratio is a major part of what a bank looks at when determining loans and loan rates. If you buy a car while saving up for a house, that can throw the numbers way out of whack. Look out for any loans and stay away from taking out more debt before making a home purchase.
Online Calculators Are Great
Online mortgage calculators are great tools, but they should not be seen as gospel law. You never know the full percentage you get on the loans or the exact monthly payments you need to budget for until the actual numbers are put together with the bank. While these numbers are great as a general guide for what you might be looking at, they’re not exact. That means you should use these tools as a guide, not a bottom line.
Never Skip the Title Search
This is a critical piece of information. You need to make sure there are no liens against the property. The last thing you want is to buy the property and find out you’re suddenly on the hook for a $10,000 bill the previous owner never paid or else you’ll lose the house. Never take someone’s word for it, and never skip the title search. It’s worth the wait and the basic fee to make sure you’re out in the clear.
Never Skip the Home Inspection
This is another critical piece of information. The home inspection is a critical part of the process to make sure that the foundation is sound and there are no hidden problems. Never skip it.