Buying a house is one of the most exciting and significant decisions you may ever make. However, it’s vital to be aware of some avoidable mistakes when planning towards your purchase. A 2019 CNBC survey revealed that 63% of millennials who bought their first homes regretted doing so because they missed some essential steps. What are some of the things you need to avoid? Below are a few crucial ones to consider.
1. Making an offer on a property without full pre-approval
Several people make an instant offer in a bid not to lose out on a property they’ve found and have interest in. In many cases, they do this without having gained pre-approval. Besides being a wrong step in the property purchase process, it’s also a significant financial risk as you run a high possibility of losing any deposit you made on the property.
It’s advisable to avoid making an offer without full pre-approval as you end up paying a substantial amount which is often non-refundable. Furthermore, avoid paying for inspection and property appraisals, especially when you’re yet to get fully approved. Instead, it would help to seek the services of credible mortgage brokers experienced enough to guide you through the pre-approval process.
2. Wrongly assuming that not using a buyer’s agent is a money saver
Although agents work primarily for the buyer, it’s the seller’s obligation and responsibility to pay them. Being aware of this will help you detect any possible fraudulent activities when an agent attempts to ask you to make any payment.
Unfortunately, several first-time property buyers fall prey to this scam and end up with significant expenses. As a result, buyers who tend to be unsure of the real estate terrain assume that the best way to prevent unnecessary costs is to avoid using a buyer’s agent. However, they may prove helpful, so it’s best to find genuine ones you can work with.
3. Waiting till the last minute to gain pre-approval
Although it’s best not to make an offer before a full pre-approval, the waiting period shouldn’t stop you from looking around to gain a fair idea of what property you want. Quite a number of property sellers may demand to see a pre-approval letter even before allowing you to see the property, but you should avoid making offers.
Indeed, the real estate market thrives on competition and a ‘first-come, first-served basis.’ However, it helps to work with more lenient real estate agents who will allow you to view the property even before you get pre-approved. Doing this will help you cut out the avoidable long hours of property viewing when you finally have your letter.
4. Missing out on any loan repayments
Defaulting on loan payments is a red flag that makes lenders wary of granting your request for a home loan. Any loan you’re currently repaying will form a basis on whether or not you’ll get any subsequent ones you apply for. Your current credit score plays a significant role in your approval. Therefore, missing out on some payments affects your score, which can ultimately negatively impact your application for a mortgage.
Furthermore, never assume that once a lender grants a loan commitment, that’s all there is to it, as lenders are backed by law to revoke any mortgage commitment they made earlier. For instance, if a lender notices any discrepancy in your credit history, this affects your chances of getting the mortgage you were working towards. This makes it vital for you to keep up with your payments and work towards a strong credit score.
5. Changing banks at the last minute
Changing banks at the last minute can significantly affect your property purchasing process. You could be tempted to do this based on a juicy offer from a competing bank or due to your dissatisfaction with your current financial service provider. However, it’s best to avoid the urge to change banks during the period you apply for a mortgage, as a verifiable banking history is one of the requirements for a full pre-approval and approval. Opting for a new bank now means you won’t have any credible history that your potential lenders could check, and this can be a red flag.
Purchasing a home is a significant step and should be done right to make the process as rewarding as possible. Hopefully, the five points discussed above will help you know which mistakes to avoid in your house buying journey. Additionally, remember to seek advice from experienced quarters, such as mortgage brokers, before taking a step.