Want to Buy a House? Things You Should Avoid!
There is no doubt that buying a home is a major decision. Your
home is probably the most expensive single purchase you will ever
make, and with median home prices now exceeding $180,000 that
trend is likely to continue. If you want to buy a house,
there are many things to consider before making such a major commitment.
Avoid major purchases
It is important to avoid other major purchases until you close
the mortgage loan on your home. The mortgage lender will take a look at
all your outstanding debt, including car loans, personal loans
and credit card balances. Any purchase that increases your debt
can negatively affect your credit rating and unnecessarily
increase your interest rate.
If you want to buy a house, it is also a good idea to hold off on major purchases so that you
will have cash on hand for any unforeseen home repairs or other
surprises. Also don't forget that you will need money for
furniture and home appliances. It is always a good idea to have some
cash on hand for these kinds of necessities.
Avoid credit report error
Many home buyers are also blindsided by surprises contained in their
credit reports. A mistake, or a negative credit event you
have forgotten about, could have a big impact on your mortgage
loan application. It is not unusual for credit reports to
contain errors, so it is always a good idea to get a copy of your
own credit report and review it carefully prior to applying for a
mortgage loan. This tactic gives you advance notice of any
issues creditors are likely to have, and if the negative
information is incorrect, it gives you a chance to clean up your
credit report before the mortgage lender sees it.
Avoid job changes
Remember too that home mortgage lenders will take your job
history into account. Most lenders prefer long-term employment
histories. Hence, it is never a good idea to change jobs
while in the middle of a home and home mortgage search. Of
course, some job changes are involuntary, but if you can at all
avoid it, you should put off your job change until after the
mortgage loan has been negotiated and closed.
Avoid paying any earnest money directly to seller
These days it is becoming more and more common for sellers to
sell their homes themselves, without the help of a real estate
agent. This type of arrangement can be a good deal for both
buyer and seller, but it may present a challenge to the potential
buyer when it comes to the so-called earnest money used to prove
that the buyer is serious about purchasing.
It is important that any earnest money used to back up the offer
go into a trust fund if you want to buy a house and not directly into the hands of the home
seller. The use of a trust fund is to protect your
interests and make sure the money is not used inappropriately.
If you are negotiating with a seller who is not using the
services of a real estate professional, it is vital for the buyer
to use an attorney to represent your interests and hold any
deposit money until the closing.
Avoid buying homeowners insurance after purchase
Speaking of protection, the time to line up
home owners insurance is before the purchase, not afterward. Your mortgage lender will
want to see insurance information before the closing of the loan.
Taking care of insurance needs ahead of time will also give you
time to shop around for the best rate. When shopping for
homeowners insurance, be sure that your policy covers the
replacement cost of the home. With home prices rising by double
digits every year, it is vital that your insurance policy pay
what it will actually cost to rebuild your home in the event of a
fire or natural disaster. If the home you are buying lies in a
flood zone or earthquake prone area, you may need to consider
specialty insurance to cover these specific types of hazards.
Avoid emotionally involved
It is important to take the purchase of the home very
seriously and try not to get emotionally involved in the
purchase. Especially, don't become friends with the seller. Try to treat the home as a purely financial
transaction. It is difficult to not become emotional about
something as personal as a home, but emotions can sometimes be
blinding. Becoming emotionally attached to a house could cause
you to overlook problems with the home construction or
deficiencies in the location.
Avoid casual home inspection
Finally, another mistake many people make is not having the home inspected
by a qualified home inspector. Merely having the house looked at
by a relative or friend with knowledge of construction may not be
enough. A home inspector can uncover potential problems like
termite infestation, cracks in the foundation or other serious
problems a casual look may not reveal.
Engaging the services of a professional is a very important part
of the home buying process. In addition to the home inspection,
it is important to engage the services of a real estate agent, a
real estate attorney or both. Buying real estate is a
complicated process, and having someone to guide you through the
process will help you avoid any unpleasant surprises.