You may have purchased many expensive things in your life like cars, high-end laptops, etc. However, buying a house or a parcel of land is completely different. This is because when a huge amount of money is at stake, then there is no room for mistakes.
If you don’t know how to buy a condo or apartment without risking a lot or how you can prevent the common mistakes, then make sure that you don’t do the following:
- Proceeding Without Checking Credit Report
If your credit score is not up to the mark, then you can end up paying a much higher interest rate than standard. So, it’s highly recommended that you check your credit score before you start approaching traditional banks and NBFCs for home loans. Besides, there are many reasons you need to fix your credit apart from saving money on interest. These include lower interest rates, access to a higher credit limit, lower financial pressure on your spouse, no requirement of co-signers for loans, etc.
- Ignoring Key Factors in Light of Aesthetics
When you are presented a house that has all kinds of beautiful fixtures, finishes, and architectural marvels, then you may forget to pay attention to the stuff that matters. For instance, if the house is located on a busy street or if the neighbourhood is rather unsafe, then the beauty of the house won’t do you any good. So, when you look for house, be sure to look beyond the appearance.
- Making a Small Down Payment
If your credit score is good, then you may not need to make a 20% to 30% down payment to buy a home. For instance, you may be able to make the purchase with a modest down payment of 5% of the property’s cost. However, this can also be a terrible idea.
By choosing to make a small down payment, you can reduce your immediate financial burden to a huge extent. However, in the long term, you have to pay a large amount of money in the form of interest. So, it’s wise to increase the down payment amount as much as possible.
- Not Doing Your Research
Scams in real estate are pretty common. You may remember the Maryland man who was sentenced for defrauding thousands of homeowners in a nationwide scam involving more than 4 million USD. There are many scam artists like him operational even today. So, when you finalize a house for purchase, then make sure that you check the documents closely and also conduct a background check of the owner/builder before you make any important decision.
There are some other things that you also need to keep in mind when doing research. For instance, you need to know how the ever-worsening weather can affect your home.
- Looking for Houses Before Finalizing a Mortgage
Many first-time homebuyers make the mistake of shopping for houses when they don’t have a mortgage deal in hand. What often happens in a situation like this is that a homeowner finds the perfect house and plans how they would arrange the place as per their requirements. However, when they approach a lender, then their dreams are quashed when they are told that they can’t borrow the full loan amount for the property. To avoid making this mistake, you can ask your lender about mortgage preapproval before you actually start exploring the real estate market. If you are able to get a deal, then you can raise competitive bids with the realtors and have the upper hand in the sale. You are also taken more seriously when you have guaranteed funds.
Buying a house is a big decision which is why you can’t be too careful. That said, you can make the process a lot easier by doing your homework. The information above will cover most of the important points but you should also do exhaustive research on your own end as well. Good luck!
