Buying a first home is an exciting yet daunting experience, and it can be easy to make mistakes along the way. For first-time homebuyers in Michigan, it’s important to be aware of the common mistakes that can occur during the home buying process, so you can avoid them and make the experience as smooth as possible.
From not getting pre-approved for a mortgage, to not budgeting for closing costs, to not having a contingency plan, these mistakes can be costly and can cause stress and disappointment.
In this article, we will discuss the top mistakes first-time homebuyers in Michigan should avoid, so you can make informed decisions and have a successful home buying experience.
Table of Contents:
- Overview of common mistakes first-time homebuyers in Michigan make
- Understanding the difference between pre-qualification and pre-approval
- Importance of getting pre-approved before house hunting
- Credit score requirements for pre-approval
- Importance of considering closing costs when calculating total cost of buying a house
- What closing costs include
- Negotiating closing costs with the seller
- Importance of a home inspection
- Qualifications and licensing of inspector
- Reviewing the inspection report thoroughly
- Importance of including a contingency clause in the purchase agreement
- Different types of contingency clauses
- Following through with the contingency clause if it’s not met
- Practicality of the home (location, layout, size)
- Potential costly repairs or renovations
- Long-term potential of the home
- Backup plan in case the home buying process falls through
- Risks and challenges of the home buying process
- Plan in place to deal with any potential roadblocks
Not getting pre-approved for a mortgage:
One of the biggest mistakes first-time homebuyers in Michigan can make is not getting pre-approved for a mortgage before beginning their home search. It’s important to understand the difference between pre-qualification and pre-approval.
Pre-qualification is an estimate of how much you may be able to borrow, while pre-approval is an actual commitment from a lender to lend you a specific amount of money.
Items needed to get Pre-Approved for a Mortgage:
- Drivers License
- Social Security Card
- 1 Month Paystubs
- Most Recent 2 Year W2 Statements
- Most Recent 2 Years Tax Returns (if self employed or commission)
- 2 Months Bank Statements
- Most Recent Quarterly Retirement Statement
- Home Owner Insurance Quote
Without pre-approval, you may fall in love with a home you can’t afford or miss out on a home you can afford because you didn’t have proof of funds. Additionally, many sellers and real estate agents may not take you seriously as a potential buyer without a pre-approval letter.
Related: Zero down home loans
Not budgeting for closing costs:
Another common mistake first-time homebuyers in Michigan make is not budgeting for closing costs when calculating the total cost of buying a house. Closing costs are expenses that are incurred in addition to the purchase price of the home, and they can add up quickly.
These costs can include things like appraisal fees, title insurance, and attorney’s fees. Not budgeting for closing costs can cause financial stress and even lead to not being able to close on the home.
It’s important to understand what closing costs include, and to negotiate with the seller to have them cover some of the closing costs.
Not getting a home inspection:
Not getting a home inspection: A home inspection is an important step in the home buying process that many first-time homebuyers in Michigan skip.
A home inspection can reveal any potential issues with the home, such as structural problems or pest infestations, that may not be visible during a casual walk-through.
Skipping a home inspection can lead to unexpected and costly repairs down the road, and can cause stress and disappointment. It’s important to hire a qualified and licensed inspector, and to review the inspection report thoroughly and ask questions.
Being swayed by aesthetics over functionality:
When buying a first home, it’s easy to get caught up in the aesthetics of a home and overlook the practicality of it.
First-time homebuyers in Michigan should consider the practicality of the home, such as location, layout and size, in addition to how it looks.
Not being aware of potential costly repairs or renovations can lead to financial burden. Additionally, it’s important to consider the long-term potential of the home and whether it will meet the needs of the buyer for years to come.
Not having a contingency plan:
Another mistake that first-time homebuyers in Michigan can make is not having a contingency plan in case the home buying process falls through.
The home buying process can be unpredictable and there are many potential risks and challenges that can arise. Without a backup plan, a homebuyer can find themselves in a difficult situation.
It’s important to be aware of the potential roadblocks that may arise, and to have a plan in place to deal with them. This can include having a plan B or C property in mind, or having a savings plan to cover unexpected expenses.
Summary for first-time homebuyers in Michigan
Buying a first home can be an exciting yet daunting experience for first-time homebuyers in Michigan. It’s important to be aware of the common mistakes that can occur during the home buying process, so you can avoid them and make the experience as smooth as possible.
Some of the mistakes that first-time homebuyers in Michigan should avoid include not getting pre-approved for a mortgage, not budgeting for closing costs, not getting a home inspection, skipping the contingency clause, being swayed by aesthetics over functionality, and not having a contingency plan.
By avoiding these mistakes, first-time homebuyers in Michigan can make informed decisions and have a successful home buying experience.
Come and visit us at Riverbank Finance! We can help you start the pre-approval process for buying a home in Michigan. Call us at 800-555-2098 to schedule an appointment with one of our professional loan officers. We want to help you get into your new home!