Buying a new home is exciting! However, house hunting can be a daunting process, and unless you have unlimited funds (and who does?), mistakes can be costly. Avoid these 6 common errors and you’ll find the path to home ownership a lot less frightening.
- Shopping for a home before qualifying for a mortgage.
We get it. Looking at homes is WAY more fun than meeting with a lender. But if you find yourself drawn to a home before you’ve determined what you can borrow, you may be setting yourself up for heartache when the home you want is out of your budget, or off the market by the time you get your mortgage in place.
What to do instead:
Meet with your bank or lending institution to get pre-qualified for a mortgage. This will help you and your real estate agent make educated decisions while house hunting, and it can also give the seller confidence in accepting your offer to purchase.
2. Choosing the wrong mortgage.
Not every mortgage is the same. And different lending institutions often have a variety of different options available. Sure, you may be able to get a mortgage with a 5% downpayment, but you will pay more over time in interest, and may not qualify for as good a rate. And some borrowers may wish to pay off their mortgage early to save on the interest, but some loans are subject to prepayment penalties which can cost you hundreds or even thousands of dollars. Get advice from a variety of lenders and discuss all your options with them.
Tip: Stats show that visiting multiple mortgage lenders can help you get a better interest rate.
3. Trying to work with several real estate agents from different companies.
You probably won’t find your dream home any faster by asking multiple agents to search listings for you. Why?
In the Bahamas, real estate agents have access to the same information and property listings and can show and sell each other’s listings on a co-broke basis. You may end up with several agents attempting to set up showings for the same property which can lead to confusion and wasted time for you both. It’s in your best interest to do your research and choose one real estate agent who you click with, and who understands your wants and needs.
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4. Thinking every problem is an easy fix.
Most buyers fall in love with one of the first properties they visit. But be wary of rose
colouredglasses. While minor cosmetic issues are easy to fix, watch out for signs of neglect, like a lawn that hasn’t been cared for, unusual odors, or mold. Having an independent appraisal done and hiring an inspector to look for damage could save you thousands of dollars and a lot of heartache in the long run.
5. Getting distracted by staging.
A beautifully staged home sells more quickly. Real estate agents know that this is because it is easier for a buyer to see themselves living in a home when it is well staged. However, pretty furniture and fresh paint may distract you from the drawbacks of a home. Conversely, a house in need of some minor TLC, packed with old furniture, may actually be a diamond in the rough.
Tip: Make a list of your wants and needs for your home and share this with your realtor before you go on viewings. At the showing, rank where the property falls on each of these from 1-5. This can help you stay focused and assist your realtor in narrowing down listings that may be better suited to you.
6. Being unrealistic about the budget.
Buyers want a great home, in a good location, with every amenity available. Also, they want to buy it on their price. Unfortunately, what often happens is that the desires are greater than the budget. In order to avoid frustration, you may need to either increase your budget (if you have the resources to do so) or adjust your expectations.
Being realistic about your budget doesn’t mean that finding the perfect home for you is an impossible dream.
A good realtor will be honest with you about what you can expect to get with your budget and will offer solutions. Perhaps looking at a community you hadn’t considered before will open up options in your price range. Purchasing a home with an attached efficiency can help offset the mortgage.
By being open to suggestions and clear about your true priorities, you will come away a happy new homeowner.