Mistakes people make when buying a first home
Mistakes to Avoid When Planning to Become a Homeowner
Becoming a homeowner for the first time bears more challenges than most people realize. A wrong turn during this process may lead to a failed deal and become a source of stress and lost money. It is crucial for first-time buyers to be aware of the most common mistakes and challenges they have to face, such as finding the right agent, getting approved for a mortgage, staying within a budget and others. Use these guidelines to fulfill your dream of becoming a homeowner and finding the best deal for you.
Look beyond mortgage payments. Just being able to afford mortgage payments doesn’t mean you can afford to own a house. You are going to enter a long-term commitment with such expenses as taxes, property insurance, maintenance, homeowner association dues, and higher water and electric bills to name the most major ones.
Look for a home only after you’ve secured a loan. Don’t start your home buying process with search of home (unless you have enough cash for your first house). Pass a mortgage prequalification first. This way the decision you make will be a financial one rather than an emotional, since you will know for sure whether you qualify for a mortgage or not and will know the price range to look for a house in.
Turn to professional help. It’s not a good idea to venture into this process of buying a home for the first time alone, without a professional help. Take your time to find a good broker or loan officer, a reputable real estate agent and maybe a lawyer. Make sure the agent and other professionals you hire have references from previous buyers or are recommended by your family or friends so that they could provide truly independent advice that serves your best interest.
Handling down payment. One of the most common and biggest mistakes first-time homebuyers make is that of spending most or all their savings on closing costs and down payment. Homebuyers will not have to pay for mortgage insurance if they make a down payment of 20% or more. But when done at the expense of their savings, living on the edge makes the risk less worthwhile.
Deal closing. Until the deal is closed don’t go into any major expenses, such as buying of furniture or car, not to jeopardize the closing. After the contract is signed it takes as a rule about 30 days for the deal to be close. With lending environment being so tight at present, lenders are sure to pull your credit reports before the closing just to make sure your financial situation remained unchanged since they’ve approved the loan.
