Here are five common home-buying mistakes you should avoid.

Even in normal markets, the buying process can be overwhelming. There’s so much to keep track of; it’s easy to lose focus and make mistakes. In a seller’s market like ours, this is especially true, so today we want to share five common mistakes buyers make and how you can avoid them:

Mistake No. 1: Buying down points on their interest rates. If you aren’t familiar with this, some buyers pay money upfront to lower their monthly interest rate. Let’s say you spend $1,000 to lower your interest rate by half a point. By doing this, you save $20 a month on your payment. This math only makes sense if you plan on staying in your home for a long time—a little over four years in this example. If you don’t plan on staying in your house for a while or aren’t sure about your future, it might not be worth buying down your rate.

Mistake No. 2: Taking on new debt after going under contract. When a lender pre-approves you, one of the big things they look at is your debt-to-income ratio. If you buy a new car after they do their calculations, it could throw everything off. As a result, your interest rate could increase, or you might not even qualify for the original loan anymore.

Mistake No. 3: Looking at the list price instead of the monthly cost. Huge list prices can be scary, especially when homes have appreciated so much recently in our market. However, what you really need to worry about is your monthly payment. Your mortgage often includes things you can’t see from the list price, like your property taxes or homeowners insurance. Talk to your lender about the top dollar amount you qualify for as well as what it will look like every month.

“We always recommend our clients work with a reputable local lender.”

Mistake No. 4: Working with an unknown, online lender. I’ve seen a few buyers work with shady lenders because they offer the best interest rate. Low interest rates are great, but working with a lender who isn’t good at communicating or providing the proper documents will ultimately hurt your chances of winning a great home. Your lender doesn’t just have to work with you; they have to work with your seller, their agent, your agent, the HOA association, and more.

We always recommend our clients work with a reputable local lender. Not only will they communicate with you promptly, but they also know the area you’re buying in like the back of their hand. If they vouch for you to the seller’s agent, you could even get a leg up when making an offer.

Mistake No. 5: Skipping the home inspection. Home inspections are not required, and they can be costly. Plus, many sellers don’t like that it allows you to back out of the contract. However, paying for an inspection could save you thousands of dollars down the road. If anything important comes up, you can either have the seller fix it before moving in or move on to another home.

Hopefully, you now know to avoid these mistakes when buying. If you need help navigating this tricky market or have any questions, please call or email us. We are always willing to help!