Tips for Avoiding Making Costly Mistakes When Buying Property

1. Be Realistic About What You Can Afford

The prospect of owning land is exciting for everyone, but prospective owners should be cautious when determining how much they’re willing to spend on a piece of property. 

When you begin the process, it’s important to have a budget, and to stick to it. First-time buyers should set realistic goals, including finding a loan that offers comfortable monthly payments. 

A mortgage affordability calculator is a valuable tool to know your price range and to better understand a figure that makes the most sense for you.

2. Check Your Credit Reports

Take a look at your credit reports and make sure there are no errors that may need correcting.

Different mortgage lenders have different requirements, but banks and financial institutions will look at your credit score closely to determine whether you even qualify for a loan. It’s important to review your scores for accuracy, and it’s easy to do so by requesting a free credit report each year from the three main credit reporting bureaus.

Consumers have the opportunity to dispute errors found and potentially fix the problems that may be preventing them from securing a mortgage loan.

3. Find the Right Source for Funding

Fortunately for buyers, there are several funding options for purchasing land. From a conventional bank or credit union to seller financing, prospective landowners have a number of options to make their dream a reality.

While credit scores may determine whether or not you qualify for a mortgage loan, don’t assume this traditional style of lending is your only opportunity for buying land. When you look into as many options as possible to find the best funding sources to meet your needs, you’ll avoid locking yourself into a financial commitment that may not benefit you in the long term.

4. Inspect a Property Ahead of Buying Land

Have the property you’re interested in professionally inspected.

Never purchase land before knowing what you’re going to get and look closely at the features that will determine how you intend to use the land. Before you buy, important factors to keep in mind should include: access to the property, the area’s topography, neighbors’ use of land, and whether the land is in a flood plain.

Hire a surveyor to show you the property lines to avoid inaccuracies that can ultimately cost you money.

5.Find the Right Agent When Buying Land

Not all real estate agents come with the same level of experience when it comes to land transactions.

Buying land is different from buying a home and you’ll need someone who has prior experience working in land transactions when you decide to move forward. Finding a qualified land professional is easy if you use helpful resources including an agent listed with the Accredited Land Consultant (ALC) Designation.

6.Ensure You Sign Up for the Correct Insurance Policies

Once you decide to purchase land, protect your investment with the right insurance policies. A land consultant will help you determine the best policies for your needs, and may help you understand which additional policies may best suit your situation. Common types of policies for landowners include:

  • Title insurance
  • General liability insurance
  • Property insurance
  • Crop insurance

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