As many of you know, Rusty and I bought a new home in June, after selling our behemoth of a house in May. Like so many people do, we bought the most expensive house we could afford the first time, only to find ourselves chained to a heavier mortgage than we liked, for a house that was entirely too big for our needs. This time, we downsized so that we could have a better life. A life where we get to travel, a life where we own TWO homes (one in Thailand!), and a life where we don’t have to give up the good things we want to experience just so that we can pay the mortgage on two uneeded bedrooms. Now? NO mortgage! Be smart! Buying a home is expensive. In fact, it’s likely to be the most expensive purchase you make in your lifetime. Here are just a few costly mistakes to avoid to ensure that you don’t end up spending more than you need to.
Trying to apply for a mortgage with a low credit score
A low credit score will reduce your chance of being able to secure a mortgage. Some lenders may turn you down and each rejection could harm your credit score further. Those that do accept you will likely charge huge interest rates. As a result, it’s worth cleaning up your credit score before you apply. Credit Karma offers a great guide on building your credit score.
Putting down the lowest down payment that you can
Many first-time buyers try to get away with paying the lowest down payment they can, because this means less saving up. However, this could mean higher monthly costs, higher interest rates and PMI. If possible, try to save up at least a 20% down payment. This does mean a lot more saving up, but you’ll save a lot of money in the long run.
Forgetting all the other extra upfront costs
The down payment is just one cost of many upfront costs including appraisal costs, paperwork fees and credit check fees. Make sure that you’ve got some extra money set aside for these costs. You may also have to pay a moving company to help move your belongings. The likes of Bekins Moving Solutions moving companies could be worth looking into for affordable rates. Alternatively, you may be able to rent a van and do the move yourself.
Failing to negotiate the price
Providing that a seller hasn’t had too much interest, you’ll usually be able to negotiate the price a little. Even if you only knock 2% off the asking price, you’ll still be saving yourself thousands. This can be easier when buying through an independent seller, although you’ll still usually have some flexibility when going through an agent.
Forgoing a home inspection
A home inspection is always worth investing in before buying a home. It ensures that the property is in good condition and that there are no hidden future issues to contend with such as roofing damage or pest problems or subsidence. All in all, it could prevent you buying a bad property that ends up costing you huge amounts in the long run. Look for a reputable company such as XY Home inspection so that you know you’re getting a good survey of the property.