Owning a home is the American dream, but it can quickly turn into a nightmare if make any big mistakes. Some of the most common mistakes include buying too much house for your income, using the same realtor as the seller and being too picky when you’re house hunting.
Getting a Larger Mortgage Than You Can Handle
Most banks are willing to approve mortgages for borrowers with payments that are far larger than the borrower feels comfortable paying each month. Writing down all of your monthly expenses and comparing this number to your monthly income will give you a good idea of how much you can afford to spend on your mortgage. Remember that property taxes and homeowners insurance also need to be paid regularly. Your budget should include a line item for adding to your savings account, as saving money for the future is one of the best things you can do for your finances.
One of the best things you can do is get pre-approved for a home loan. This way you will know the interest rate you’ll be paying before you start looking at homes. It still may be a bad idea to look at homes that are priced as high as the amount you’re approved for, but you’ll be able to accurately calculate your monthly payment amount.
Having a wish list of all the things you’d love to have in your new home is a great starting point, but it’s very unlikely that you’ll find everything you want in one house. Some things are easy to change, such as wallpaper and carpeting. You can also add curb appeal easily once you have purchased your home. Avoid buying a home in an unsafe neighborhood in the name of saving money, but don’t bypass a home you love because the living room isn’t painted the right color or the grass in the front yard is dead.
Using the Seller’s Real Estate Agent
Using a real estate agent is usually a good idea when you’re shopping for a house, but try to avoid using the agent that is selling a home you are interested in. Even though every agent is supposed to act in the best interest of everyone they represent, using the same agent as the seller is likely to result in paying a higher price for the home. It’s almost impossible for a single agent to work in the best interest of both parties.