Buying a property is a lifelong dream for many people worldwide, and signing on the dotted line, being handed your first set of keys, and becoming a homeowner is often a long and complex journey that is worth the ride for the majority of people who commit to this worthwhile endeavour.
But the journey to being a homeowner isn’t always easy or even fun. It can be fraught with lots of house hunting mistakes and errors that can end up being costly and making things more complex than they need to be. Especially for those embarking on their journey for the first time; a recent study in 2023 found that 82% of millennials regretted aspects of their first property purchase.
To avoid being part of the buyer’s remorse group and to be satisfied you made the right decision, let’s take a look at the things you absolutely should be avoiding.
Looking Before Approval
The major thing you absolutely need to avoid is looking for properties before you have even gotten approval for a mortgage. Even approval, in principle, is better than nothing, and you at least need to know that you will be accepted before you start viewing, as not only will you delay the entire process, but you will be wasting the seller’s time if you get declined.
The best way to avoid this is to start the application process as early as possible. Get your initial approval or get your finances in order as early as possible, and have a prequalification of what you’re likely to be offered so you know what ballpark price you can aim to look at.
While this doesn’t guarantee you will get approved, it can help you make a stronger offer and what you can afford realistically. So before you set foot in any property with a view to purchase, get pre-approved or prequalified to know you are not wasting anyone’s time.
Considering Only One Quote
Sure, getting more quotes from different lenders can take time; working with a mortgage broker can speed up the process somewhat by ensuring your appreciation is ready and submitting it to the lenders most likely to approve it, but limiting yourself to one offer or only applying to one lender can be really limiting. You might not be getting the best interest rates or more favourable repayment terms.
Initially, it might be faster, but it can result in you not getting a quote that does what you need and leaving you paying more for your lending.
Take your time, research your mortgage options for your circumstances, look for government grants and schemes that you might qualify for, and ensure you understand what you are getting into before agreeing to take a mortgage.
Not Working with A Real Estate Agent
Thinking you can go it alone and source and view properties on your own can be a massive take. This is because real estate agents are, as you’d imagine, experts who can help you tailor your search and uncover the best properties. This doesn’t mean you can be proactive when looking and working alongside a real estate agent to bring properties to the table to view. But for when you are ready to view properties, having an expert in your corner can be extremely advantageous.
Before you start your property search, talk to family, friends, and colleagues to ask for advice on the right real estate agent or someone they recommended. Then, meet a few, take questions with you to help you determine how beneficial the relationship will be, if they get what you need and want, not what they want, and make your decision to enable a more fruitful search.
Buying Too Expensive A Property
Overextending your finances to be able to afford a property is a huge mistake many have fallen into in recent years. A seller’s market dictates increased prices and bidding wars to land properties, and if properties are scarce and others are interested, it might seem like a good idea to go with a higher offer than you initially would have. But this could be your downfall.
When accepting you for a mortgage, your lender will look at your debt-to-income ratio to determine what you can realistically afford. However, it doesn’t consider groceries, insurance premiums, gasoline, etc., just your debt level, meaning you might get accepted for an unrealistically high mortgage that does not accommodate all of your living expenses.
So, regardless of what you get accepted for, avoid going right to the end of your approval limit, as you will not be able to afford it in real life. Take into account your outgoings and living expenses as a whole to see if you can actually afford the mortgage, and if you do think you cannot go right to your limit, keep it lower to bring down your monthly payments.
Not Knowing Your Credit Score
Not knowing your credit score or not paying attention to improving it can result in applications being rejected or even coming up with a lower mortgage offer, increased interest rates, and unfavorable repayment terms.
The more unsuitable or lower your credit score, the worse it looks to lenders. This implies that you might not be a safe bet. So before you even begin applying, look at what is impacting your credit score and work to correct it to have the best base from which to start.
Not knowing your credit score or not paying attention to improving it can result in applications being rejected or even coming up with a lower mortgage offer, increased interest rates, and unfavorable repayment terms.
Once you apply and get pre-approval, avoid taking on new debt or making poor financial decisions, such as overspending on credit cards or making large purchases, as these will be factored into the actual approval and can scupper your chances of being accepted.
Waiving a Home Inspection
A home inspection is essential for avoiding massive issues once you buy your home. For some, forgoing this can save time and money, but it can be a risky decision. Anything that is uncovered once you’re the owner is your responsibility, and it can be costly.
If a seller is demanding no home inspection and is pressing the issue, this could be a red flag that there is something they don’t want uncovered.
While it might seem like it’s just delaying the entire process, and you are confident it won’t show anything up, it’s better to be safe than sorry and get a complete idea of the condition of the property so there are no major nasty surprises that will hit you where it hurts: your bank balance.
Tell your real estate agent any offers you make are dependent on the inspection and what it uncovers, as the results could have major implications for you.
Choosing House Over Neighborhood
The right house is instrumental, and the wrong location decision can swing both ways. You can buy the perfect house in the worst neighborhood or vice versa, and both can have implications for your lifestyle. Buying a house in a bad neighborhood can affect your safety, the quality of local schools, and the value of your property. On the other hand, a great neighborhood can enhance your quality of life and the value of your investment.
You need to make sure you are happy with the area you could potentially be living in because while you change the house, you can’t change the area, and if you’re not well located or don’t have great commuting links or have access to services or you simply don’t like the area, you won’t be entirely happy once you do move in.
Do your homework on the area, look at what it offers, how it works for your lifestyle, and what you can expect when you move in. Visit the area for different times of the day, do a run-through of your commute, either by road or public transport and do some exploring to ensure you’re happy with the location. If not, you know before you make an offer and can redirect your search.
Waiting for “The Feeling”
Many property shows place a significant emphasis on getting that feeling; you know when you walk into a property and immediately realize it’s your home! Sadly, that isn’t always a reality for everyone, and it doesn’t always happen at all, never mind right away. And if you’re waiting to get that elusive feeling, you might be discounting perfectly good properties because you didn’t get that initial rush of love or feel the connection.
Instead of expecting to get that feeling and waiting for it, look at all properties with an open mind. Look at their potential, what you can make of them, and what living in them could be like for you. The more open-minded you are, the more likely you will be to find your perfect property.
As you can see, there are many mistakes you can make when buying property. These tips can help you avoid some of the more major ones you need to be aware of that can be seriously damaging to your experience.