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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.



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