When the time comes to buy a home, there’s a lot to think about. Make sure you avoid these common mistakes.
1. Overshooting your budget
Shopping for houses can be fun! When you’re dealing with large numbers, it probably doesn’t seem like a huge deal to spend another $10,000 or $15,000 to get the home you really love. People often look at the top end of their affordable monthly payment but don’t think about what could happen if they lose their job and their income goes down.
What to do: Use Old National’s Money Management tool to help determine what you can afford. Then work with an Old National Mortgage Loan Officer to get prequalified.
2. Not accounting for added costs
Owning a house carries longer-term expenses including repairs, maintenance and taxes. People tend to forget these when they’re thinking about how much house they can afford.
What to do: Ask previous homeowners what their average utility costs and property taxes are. Get a homeowner’s insurance quote. Then budget 1 to 3% of the home’s purchase price to get an estimate of the annual repairs and maintenance.
3. Skimping on your down payment
While it’s possible to purchase a house with as little as 3% down, it might not be the best plan. Consider having closer to a 20% down payment.
What to do: Avoid years of Private Mortgage Insurance and have a lower monthly payment by saving aggressively toward a down payment.
4. Neglecting to get everything in writing
On your final walk-through of the house, don’t discover the refrigerator missing when you thought appliances were part of the deal. Common items that are often of contention include kitchen appliances, window treatments, hot tubs and washers and dryers.
What to do: Go through your contract in great detail and ask about any items you expected to be there but aren’t listed. Then get them added in writing.
5. Skipping the home inspectionEven if the home looks like nothing is wrong, an inspector is there to check for things you don’t know to look for including water damage, cracks in the foundation and hidden electrical issues. If the inspector finds conditions that need repair, you might be able to negotiate a better price.
What to do: Have a non-biased professional inspection done before you close on the house and ask questions.
6. Thinking a brand new house requires brand new everything to go with it
Just because you have a new formal dining room and no formal furniture to go in it, doesn’t mean you should rush out and buy some. It’s a big mistake to upgrade all of your stuff to go in your new house.
What to do: Live in your new house a while, so you can determine what exactly you need before you make any more big purchases. Using Old National’s Money Management tool will also help you budget for those new things!
7. Assuming the neighborhood is just fine
You may be living in your dream home, but discover your neighborhood’s a nightmare. Or you may have children or plan to in the near future, but didn’t consider the quality of schools or kid activities.
What to do: Ask yourself several questions during the search including “Are there good schools in the area?” or “Are there stores and restaurants nearby?” You can also usually check neighborhood crime maps online. Remember, you can change your house but not your neighborhood.
8. Not considering the resale value of your homeYou've just started the home-buying process, so the prospect of selling your new home may not have even crossed your mind. However, life is full of surprises – job relocation, family illnesses, moving to be with a loved one – any of these might make you pick up and leave your house behind when you least expect to.
What to do: While you’re house hunting, it’s a good idea to think about the preferences of a typical homebuyer. Will your home be easy or difficult to sell?
Have questions about buying a home?
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