13 Home Buying Mistakes You Should Never Make

It's difficult to ignore the distinct feeling of excitement you receive when you first begin the process of becoming a property owner. That's why, more often than not, purchasing a home can rapidly turn into a very emotional experience.

While it might be overwhelming at times, it's critical to maintain a level head and make the most reasonable decision possible. Let's have a look at some of the most common blunders that you may simply avoid!

1) Not first looking for a pre-approval loan

What better way to demonstrate that you're serious about purchasing a house than by obtaining a home loan pre-approval? What this effectively implies is that you've opted to find out how much of a house loan you'd be approved for before you've even picked a handful of suitable properties.

In a nutshell, it's the amount of money the banks will lend you to buy a house. As a result, you'll know what kind of home you can afford.

To get a pre-approval letter, fill out a house loan application, and the bank will check the information you give, such as a paystub, proof of income, and bank statement.

You'll get a pre-approval letter if you're pre-approved, which indicates the bank has agreed to lend you a specified amount of money in principle for the purchase of your property but hasn't given you a complete approval yet.

2) Not aware of the credit score card

Two of the most crucial aspects of having your home loan authorized are your credit report and credit score. As a result, it's vital to keep an eye on these two to ensure that they're both in good health!

Banks would look at your CCRIS report, which provides a picture of your overall financial health, for the former. In other words, it will let lenders know if you are creditworthy.

It would be your CTOS score for the latter, where the greater your score is, the better. Based on your prior payment history, lenders will determine if you are able to return your bills on time or not.

3) Visiting houses that are totally out of your price range

If you already have a budget in mind and a loan amount in mind, the last thing you want to do is look at houses that cost more than that.

You'd simply be setting yourself up for disappointment, as well as squandering your time and effort. It's a good idea to look at properties that are below that amount rather than exactly on the dot if you can.

4) Falling in love with your first house

It's tempting to get caught up in the whirlwind of emotions and fall in love with the first house you see. But how can you know whether it's "the one" if you haven't compared it to other comparable ones?

It's best to look at a few possibilities that check off the relevant boxes on your search list so you can at least have a sense of what defects to look for.

Return to the initial property a few more times, preferably at different times of the day, after looking at other areas to see if you can spot anything new and whether the overall surroundings are nice.

5) Refusing to look for significant problems

When it comes to faults, another typical error made by first-time homebuyers is failing to inspect every inch of the possible property for indicators of problems.

You must be thoroughly informed of the state of the property you are about to sign in order to determine whether any repairs are required, how costly they may be, and whether you will be remodeling, repairing, or completely renovating it when you move in.

If you find anything that would deplete your cash, you may be able to use this information to negotiate with the vendor to get the problem fixed or the price reduced!

6) Ignoring the surrounding area

It's not just the house you'll be purchasing; it's also the surrounding area. To avoid unpleasant shocks later on, make sure you ask the following questions:-

• Is there any new infrastructure planned in the area?
• What are the plans for the neighborhood's development?
• Will the roads become a popular rush-hour shortcut, or will they be exceedingly loud during peak hours?
• Are there any important amenities close by, or will you have to go a long-distance?
• Is there a general upward or downward trend in property prices?

Then there's the issue of your near neighbors; how do they behave while they're at home? You don't want the noises of someone who's recently started violin lessons to disturb your peace and quiet!

7) Not consulting a real estate agent

In so many ways, a knowledgeable and experienced real estate negotiator is invaluable! Hiring one is like diving into the deep end of a pool without first learning how to swim.

They can, among other things, help you narrow down the list of houses to expect in your price range, check their wide network of contacts for the latest listings and best offers, and negotiate effectively on your behalf.

8) Skipping the comparison of bank's lending rate

Not all banks provide the same kind of programs. So, if you join up with your preferred bank without checking all of the other banks' interest rates, you could just lose out on the best deal.

Don't simply glance at the rates; look at everything. Repayment conditions, customer service, and how quickly your application will be approved are all factors to consider.

9) Not fully financially prepared

You may believe that all that is necessary to purchase a property is a solid job with a good salary. Not so quickly! Do you have enough money left over after paying your monthly payments to cover your daily expenses?

What about your rainy-day fund? Ideally, you should save between 30 percent to 55 percent of your gross income each month (after statutory EPF and SOCSO deductions).

10) Having a significant amount of debt

While it is vital to have a credit history in order to demonstrate to banks that you are capable of managing your finances properly, having too much of it is never a good thing. The Deby Service Ratio (DSR) comes into play here. It's a measure of a person's capacity to repay the home loan they're seeking for.

You may kiss your approval goodbye if it appears like you'll be battling to stay alive. As a general guideline, your DSR should be between 30% and 40%. So don't be late or skip any payments, and only use your credit card when absolutely necessary.

11) Use up all your savings just for down-payment

Yes, the down payment is the most significant financial hurdle you must surmount. After all, it accounts for at least 10% of the purchase price, but it isn't the only expense to consider. Did you know that there are additional expenses to consider as well, such as legal fees for the Sale and Purchase Agreement (SPA) and stamp duty payments, to mention a few?

If you don't want to be caught off guard and lose your ideal house because you discovered you're short on funds too late, we recommend checking out this detailed list of all the rates!

12) Getting too many opinions from people

Have you ever heard the expression "too many cooks ruin the broth?" It suggests that when there are too many individuals participating in anything, there is typically a lot of uncertainty and it is difficult to make a clear choice.

When shopping for a home, it might be quite tempting to bring a large group of people with you, including your parents, partner, closest friends, and mentor. Their viewpoints may not only overwhelm you, but they may also collide!

You should be picky about who gets involved in the homebuying process, especially if you don't have a firm strategy or are easily persuaded by emotions, and this includes experts like real estate agents, lawyers, and house inspectors.

13) Making a hasty decision (that's too much)

If you find something you like that is also within your budget range in a property hotspot where houses are in great demand, you may need to make an offer quickly. However, if you don't take a step back and think about the hazards for a few days, you can find yourself giving too much to avoid a bidding battle.

Now, if the property's official appraisal isn't at or above the amount you gave the seller, the bank won't provide you the loan until the seller lowers the price or you pay the difference out of your own pocket.

BY JEREMY CHEN | Updated June 21, 2022