Homebuying Mistakes

Your home is often the biggest purchase you’ll ever make, so avoiding the following common errors might save you a lot of money.

• Not checking your credit report and score. Lenders generally offer the lowest interest rates to borrowers with high credit scores, so know what your score is and increase it, if needed — by paying down debt, paying bills on time and so on. Many credit cards offer access to your credit score, and you’re entitled to a free copy of your credit report annually from each of the three main credit agencies; visit AnnualCreditReport.com to order yours.

• Buying too much home. If you don’t know what you can really afford, you might borrow too much and end up stretched thin, financially. One rough guide suggests spending no more than 25% to 30% of your gross monthly income on housing (including property taxes and insurance). But crunch your own numbers, taking into account factors such as local tax rates, the size of your family and the state of your retirement savings.

• Not shopping around for a mortgage. First, read up on mortgages to see what kind will serve you best — 30-year versus 15-year, fixed-rate versus adjustable-rate and so on. Then get a handful of quotes from a variety of sources, such as local and national banks, credit unions and perhaps a mortgage broker or two.

• Not getting preapproved. Once you select your lender and are ready to buy, get preapproved for a mortgage. That will make you a more credible buyer, should you end up bidding against any other buyers for a home.

• Skipping the home inspection. A good home inspector will identify any quality or safety issues that you might end up paying for later — such as a roof needing repair or a cracked foundation. By identifying any problems early, you may get the seller to fix them or to give you a credit to cover your costs for fixing them — or you may just walk away.