Are you planning to buy a new house this season? Buying a home is especially a big deal for first time homeowners. This may be your biggest transaction yet!
Before spending your hard-earned savings, you’ll want to make sure you’re getting the best deal and value for your money. Homebuying can be a long and tiring process that requires vigilance and careful consideration at every step. Before you dive into the buying process, be aware of the most common mistakes that new home owners generally encounter – and find out how to avoid them!
As the survey indicates in Mortgage Statistics 2024, 29% of purchasers are experiencing hardships in saving up for the required down payment and this is postponing the moment of the acquisition. Clearly, real estate transactions are a big deal and require a lot of investment on your part. 23 Legal is here to best prepare you! Let’s explore each of these common mistakes in detail…
13 Common First-Time Home-Buying Mistakes to Avoid
Mistakes that are made while buying a home are common and can be avoided if you have prior knowledge of them. Below are some of the common mistakes to avoid:
1) Not Getting Pre-Approved
Getting a pre-approved mortgage requires you to submit your financial information to a lender, who will evaluate your creditworthiness and provide a conditional commitment for a certain amount of loan. This is an important stage since it helps you understand your budget and offers you a competitive advantage in a seller’s market. For example, if you locate your dream property and there are numerous offers, the seller is more likely to accept a pre-approved offer since it shows that the buyer is serious and financially prepared.
2) Ignoring Additional Costs
Besides the down payment and mortgage charges, there are other extra fees involved in purchasing a property. For example, the closing costs are generally between 2 and 5% of the purchase price and also include fees like appraisals, attorney fees, title insurance, and taxes. Therefore, budgeting for these fees is critical to avoiding any financial burden after the purchase.
3) Skipping Home Inspections
Firstly, a home inspection is an important stage in the house-buying process. This helps detect any prospective property concerns, like any structural flaws, plumbing or electrical issues, or even insect infestations. Although a property appears to be in ideal condition, an inspection can uncover hidden issues that could cost thousands of dollars to repair. For example, a house inspection may identify water damage in the basement or a roof that needs urgent repair.
4) Underestimating Future Needs
It is better to consider your future plans to see if the home you are looking at can fit them. For example, if you intend to have a family, you must ensure that there is adequate space for kids. Similarly, if you plan to work remotely more frequently, having a specialized home office area is a crucial requirement.
5) Overlooking Resale Value
Even though you do not want to sell the home right away, you should evaluate its resale potential. Major factors like property location, curb appeal, and layout can all have an impact on the property’s attraction to potential purchasers. Like for example, a property near public transit or in a sought-after school area has a higher resale value.
6) Not Understanding Mortgage Options
There are different mortgages available; each has its own set of conditions, interest rates, and down payment requirements. For instance, a fixed-rate mortgage provides consistent monthly payments, while an adjustable-rate mortgage (ARM) has lower rates in the beginning but can eventually rise over time. When you evaluate these possibilities, it allows you to select the best mortgage loan that perfectly suits your financial needs and long-term goals.
7) Emptying Savings for a Down Payment
While a larger down payment lowers your monthly mortgage payments and interest charges, it is critical to save some money for emergencies. Sometimes unexpected costs like home repairs or medical bills could arise, and having an emergency fund can help you avoid getting into debt.
8) Neglecting to Shop Around
Avoid settling on the first mortgage or property you locate; instead, shop around. Shopping helps you compare rates, terms, and fees from many lenders and get the best offers possible. The same is true for real estate agents; interview numerous agents and select one that understands your goals and has expertise in your preferred location.
9) Ignoring the Fine Print
When purchasing a property, you may face a variety of paperwork, including purchase agreements, loan estimates, and closing disclosures. Before you sign these papers, make sure you have properly read and understood them. For example, pay attention to contingencies like the inspection contingency, which permits you to withdraw from the transaction if serious issues are discovered during the inspection.
10) Not Considering Future Costs
In addition to the purchase price and mortgage payments, incorporate future expenditures like property taxes, homeowner’s insurance, repairs, and maintenance. As an example, older homes may require more regular repairs and renovations, which can accumulate over time and prove costly later.
11) Not Negotiating
Do not hesitate to negotiate on terms like the purchase price, closing charges, and repairs. In this regard, if the inspection discovers problems with the roof, you can negotiate with the seller to have it repaired before closing or give a credit to pay for the cost of repairs.
12) Skipping Title Insurance
If you have title insurance, it will protect you from financial loss caused by problems with your property’s title. This can shield you against concealed debts or ownership issues. While it is an additional fee, it gives you peace of mind and long-term protection for your investment.
13) Overstretching Finances
Purchasing a property above your actual budget will leave you financially unstable. You need to consider not only your mortgage payment but also additional recurring costs like utilities, maintenance, and HOA fees. Make sure your budget has a comfortable cushion to accommodate any unforeseen expenses and changes in your regular income.
By avoiding these common pitfalls and addressing house buying with knowledge, you can make a smart investment that suits your requirements and financial objectives.
Why partner with an experienced real estate lawyer?
Working with an experienced & trustworthy real estate lawyer, like attorney Ben Weaver, helps clients effectively navigate the home-buying process with success. Our clients benefit from:
- Legal Expertise
- Contract Review
- Title Search and Insurance
- Negotiation Assistance
- Handling Complex Situations
- Peace of Mind
If you are considering buying a new home this year, we highly advise against attempting this complex process alone. There’s too much at stake to DIY home-buying! Partner with attorney Ben Weaver, an expert Illinois real estate lawyer, to ensure a successful, smooth transaction.
Call Ben Weaver today to schedule a consultation and take your first step towards buying your dream home with confidence!
Remember, when it comes to buying a home, having the right legal guidance can make all the difference. Reach out to the 23 Legal team for expert assistance and tackle your dream home purchase with ease.
Do you have legal questions about real estate law in Illinois? Give us a call: (847) 447-6004
Why Choose 23 Legal
23 Legal offers Real Estate and Estate Planning legal services to individuals, families, community associations and small business owners throughout Chicagoland. We know how intimidating “the law” can be. In fact, when most people think of law offices, they think of stuffy leather chairs, huge wooden desks and pompous lawyers who charge outrageous fees. That’s not us! We believe in 1-to-1; the same lawyer should work with you all the way through. Whether you have an estate planning issue, family trust concern, or you have a legal problem in regard to a new home, business, real estate or remodel, you need a lawyer who cares. That’s where Ben comes in! We are great listeners; more than that, we are lawyers who believe that our clients always come first.
