Things You Shouldn't Do When Buying a Home

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What Not to Do When Buying a Home

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Buying a home is probably one of the biggest investments that you'll ever make in your life. It also can be one of the riskiest. There are several pitfalls and mistakes that even experienced home buyers can make. It is a good idea to take some time to consider these things that you should not do when buying a home.

Doing something to hurt your credit 

Banks will not give you a mortgage loan if your credit is bad. You are probably moving and experiencing some life changes, but losing a job is a good way to be denied a loan for a new home.

Putting too much trust in the agent showing the home

 An agent showing the home is likely working for the seller. That means they want to charge you as much as possible for the house to please their employer. Real estate companies usually pay agents larger commissions if the cost of the sale is higher, so even if you have hired the agent, they aren't as terribly interested in driving the price down as you are. 

Expecting the process to go quickly 

Buying a home takes time. The negotiation process can be arduous and take unexpected turns. If you are in a rush, you will be disappointed. You should not be moved out of your current house before negotiating for a new one. Negotiations can sometimes take months. Be prepared to hunker down and wait out a long process. If the seller or lender detects that you are in a rush to move into a new home, they may use it against you and have you pay too much.

Letting the seller/lender know that you have no idea what's going on 

The whole buying, mortgaging, and negotiating process can be confusing, but don't let anyone know if you're overwhelmed. Project a certain confidence or else banks and sellers will take advantage of you.

Getting too attached to a house 

This should go without saying but a negotiation won't work out well for you if you have decided in your head that you absolutely need to have a particular house at any cost. The seller probably will notice that and you will overpay.

Giving away financial information

You generally don't want sellers to know exactly how much you are willing to pay for a home. If they find out how much money you make or are truly willing to spend, they'll get an idea of what you can afford and decide to up their price to match what you can pay more than matching what the home's actual value may be.

Insulting the seller 

Negotiation can become heated. You could start to really dislike the seller. After all, the seller is trying to compete with you to take your hard earned money. But if you manage to get the seller to hate you enough, they will refuse to sell to you out of principle. This is not as rare as it seems. Sales have fallen through just because the buyer and the seller decided that the other was a horrible person and they didn't want anything to do with them. Keep it professional.

Going with the first lender 

Lenders are usually banks that set up your mortgage for a house. You should probably think of them as a type of seller. They will be happy to offer you a bad deal and have to take it. Remember to shop around for multiple lenders until you find one that offers you a fair deal compared to the others.

Not having backup plans 

If you can't buy a home as soon as you thought, do you have a place to stay? Do you have other homes in mind to consider if your first choice isn't possible? You need to be able to walk away from a negotiation if the deal is not good. Having a backup plan will give you something to walk away towards.

Starting with your best or worst offer 

Starting with your best offer has a good chance of getting you the house, but also has a good chance of making you pay more for it than you could have. A low-ball offer could be insulting to the seller, however. A price range that encourages further negotiation and has your low-ball offer near the bottom of it, is your best option.

Using up all of your money on the purchase 

Buying a home costs more than just the price of the new house. Once you move in you may need to perform renovations or pay off surprise liens from the previous homeowner. You may want to challenge the homeowner to pay for these costs, but you'll probably need to pay a lawyer in order to do it, which is another hidden cost. When buying a home, you should stick to a budget that has some wiggle room for hidden costs.

If you manage to avoid all of these common home buying mistakes, then congratulations, you've given yourself the best chance at moving in to a new home without getting ripped off. That's good, because after you buy a home you then need to hire some movers to get you and your family into your new house.

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on July 15, 2014

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