Let’s face it: the home buying process is complex and scary. You can read all the articles you want about the Home Buying Process and Tips for First-Time Home Buyers. But what about the common pitfalls people make time and time again?
Here are a few of these pitfalls to avoid:
Going over budget.
This is one of the most common mistakes for first-time home buyers. Many buyers waste time and money looking at homes that are simply too expensive for their budget. First-timers often make the mistake of wasting their entire life’s savings on their first home. This is rarely necessary.
The important thing is to make sure your monthly mortgage payments are reasonable enough for you to be able to sleep at night. Aiming low is better than aiming high. It may not be your dream home, but at least it will be a home you can afford.
Not being careful about credit.
Lenders will pull a credit report at pre-approval and just before closing the sale. This means that you should not do anything to jeopardize your score, from now to the very end of the process. Don’t make major purchases over 30% of your credit limit. Avoid making late or incomplete payments, opening new accounts, or closing existing accounts.
Click for tips on Repairing a Damaged Credit Score.
Not thinking about your down payment.
Contrary to popular belief, you don’t have to put 20% down. Many people regret not making a bigger down payment, while many also regret waiting years and years to save when they could have applied for a down-payment-assistance program. So talk to your lender and really look into what is right for you. They may be able to help you find the loan that will get you closer to your goal.
Looking for homes before applying for a mortgage.
We know you’re excited to start looking, but you should really apply for a loan before even starting. Today’s housing marketing is competitive. There is (usually) more demand than supply. It would be a shame to lose your dream home because you haven’t shown you’re good for it. Getting pre-approved is a great leg-up over the competition because it shows you have your credit and finances under control.
Check out our articles called Mortgage 101 and Finding the Right Mortgage for You.
Not thinking about the neighborhood.
You can find the perfect home with all the trimmings, but if it’s in an unfitting neighborhood, is it really worth it? You need to get to know the area as well as you know the home. You’ve probably researched its distance from your work and its local amenities, but have you put in the time to get to know the area in person? Meet your neighbors, walk around, track traffic at different times of the day in real time. Believe us, this is an investment you want to make. Finding out you don’t like the area can be disheartening, but better to know before sealing the deal.
Not looking into the hidden costs.
You need to have a large buffer in your budget to account for more than just the principal and interest payments. You will have to pay for mortgage insurance, homeowner’s insurance, property taxes, repairs, maintenance and utilities, and much more. And these add up more quickly than you think.
Ask your agent to help calculate what these costs amount to. Look for the right insurance plans for you, and account for 1 to 3 percent of your purchase price every year for repairs and maintenance.
Being aware of these common mistakes can make you far more advanced than most first-time home buyers. It all comes down to research, thought, planning, and practicality. If you have these traits, you should have a positive home-buying experience.
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