Buying a home is one of the most important financial decisions you’ll ever make, so it’s important to make sure you’re doing it right. Unfortunately, there are plenty of ways to mess up along the way explains Nihar Gala. Here are the three most common mistakes homebuyers make:
Putting off a homebuyer’s inspection.
A homebuyer’s inspection is an important part of the homebuying process. It will tell you if there are any problems with your future house, and show you what you need to do before moving in.
- It will help you evaluate the condition of a property.
- It can find defects that exist in a home that may not be noticeable from afar or after a brief walk-through.
- Inspectors look for structural, mechanical and safety issues found during inspections and make recommendations about repairs or replacements to remedy them before closing on the sale of your new home.
Skimping on mortgage insurance.
If you’re buying a home with less than 20% down, mortgage insurance is probably required. If so, this will cost you but it’s worth it in the long run. Mortgage insurance protects your lender in case you default on your loan and they have to foreclose on your home. This means that if something happens and things don’t work out as planned, lenders will get paid back by the government instead of losing money themselves.
It’s usually paid monthly with the rest of your mortgage payment and added onto what would be considered an additional monthly fee for homeownership: property taxes and homeowner’s insurance.
Not making a big enough down payment.
Many homebuyers are under the impression that they need to make a down payment of 20% or more. This isn’t always true, and in some cases, it can be detrimental to your financial health. The amount you need as a down payment depends on several factors including:
- How much your monthly housing costs will be (mortgage, insurance and taxes)
- Your debt-to-income ratio (how much money you owe compared with how much money you earn)
While there is no magic number for determining how big of a down payment is right for you, one rule of thumb is the higher cost of your mortgage loan , the larger your down payment should be . If you’re buying a house that costs $200k but only have $20k saved up , then consider waiting until you have saved more before buying. There are many other ways to save money besides scrimping on lattes or cutting back on dinners out – check out these 5 tips for saving more money today!
Conclusion
If you’re looking to buy a home, it’s important to know the common mistakes people make. To help you avoid these pitfalls, we recommend that you first understand what kinds of homes are available in your area and how much they cost. You can also research mortgage options like interest-only loans or FHA loans so you know what kind of financing is available for potential buyers like yourself when looking at properties for sale today!
