So, you have been saving up for a housing deposit and are ready to begin the home buying process? Buying a home can be a long, emotional process. It can be hard to truly know how to best navigate the process and end up with the perfect home for you. Listed below are common mistakes that home buyers make during this process as well as some things to be aware of as you move through the home buying process.
1. Dipping into Savings
When you apply for a mortgage, your lender will investigate your savings and spending habits. They do this to ensure that you will be able to make your mortgage repayments.
Banks look unfavorably at potential borrowers who have dipped into their savings for various expenses, and they will likely deny your application, approve you for a smaller loan, or possibly delay the process until you can provide a better history of saving. On the other hand, banks will look favorably at potential borrowers who have consistent, uninterrupted savings.
2. Not Spreading Out Cost
Many first-time buyers are tempted to opt for a shorter loan term to avoid being tied down by a 30 to 35 year mortgage loan. If you can afford the mortgage repayments, a shorter loan term is advantageous due to the savings in interest payments that will be made. However, spreading out cost is not a bad thing when it ensures that you will be able to make your repayments on time.
3. Getting into a Bidding War
Bidding wars can be dangerous for buyers, and they can lead to you buying significantly over your budget. Set boundaries in a bidding war. Determine the highest point you are willing to pay and don’t deviate from that amount. Buying a home is emotional, especially when you are a part of a bidding war, so it is important that you set limits for yourself.
4. Rushing the Process
Don’t rush the home buying process. It is important to look at multiple houses even if you fall in love with the first home you see. Be careful when it comes to the bidding process. Avoid making a first bid that is at or above the seller’s asking price.
Get the property surveyed. You want to ensure that the property is architecturally and structurally sound and that damage isn’t being covered up cosmetically.
5. Overbuying
It is common for home buyers to stretch their finances to buy the home of their dreams. This will leave a lasting impact on your finances for decades with the mortgage repayments that you will have to make. Determine what you can feasibly afford to pay each month on your repayments, and don’t deviate from it. When buying a home, it is important to leave emotion out of it as much as possible and stay within budget.