Don’t Do These Things a First Time Home Buyer
Are you planning on buying your first home sometime soon? If so, I am quite sure you’re very excited about the possibilities. Purchasing a house for the first time, however, is no easy feat. It is far too easy to make mistakes along the way.
Getting through the process deserves a pat on the back. Doing anything for the first time is usually an undertaking, but when it comes to buying a house for the first time, that is an understatement.
Unless you are super lucky, you’re bound to encounter a few pitfalls along the way. This is a normal part of the process. Everyone goes through this sort of thing…right? Well, yes. But with the information you see in this article, you won’t have to.
Before you commit to giving the real estate agent your escrow funds, you’ll want to be confident you’re doing the right things. We’re going to outline first time home buyer mistakes so that you can avoid them when you’re buying your first home. By following the advice, you’ll be well on your way to being the proud owner of your first property.
Forgetting to Get Pre-approved For a Mortgage
One of the most vital things you’ll need to do as a first time home buyer is get pre-approved for a mortgage. You cannot afford to wait to get this done until you start looking at homes. Without question, you will not want to be scrambling at the last minute if you find a home to make an offer on.
Any excellent real estate agent is going to want to see one before they start showing you homes. The preapproval will not only give you an idea of whether or not you meet the requirements even to get a mortgage on a home you’re interested in, but you’ll also be able to look around homes which you can actually afford.
So there won’t be any heartbreak down the line if you get approved for a mortgage and the house you’ve already set your eyes on is out of your price range. In addition to these things, being prepared with a pre-approved mortgage will show sellers that you’re serious and you’re not just there to waste their time.
Overlooking The Down Payment
People feel like they need to make a 20% downpayment on a home to make buying a home seem like a good idea, and while this is a great idea, it isn’t going to be a realistic goal for many people.
First-time buyers then talk themselves out of buying a home because they just believe they’re not financially ready for it quite yet, as they can’t pay such a large fee. But this doesn’t have to be the case.
Many loan programs enable people to buy a home with little to no down payment. With that being said, your down payment is not something to be overlooked either, as putting down something too small will significantly increase the amount of money you’re going to need to pay month after month.
Not Getting Your Credit Score Where it Could Be
Can you get a mortgage to buy a home when you don’t have a good credit score? Sure you can but why would you want to? Your credit score plays a significant role in the mortgage interest rate you’ll receive from the lender. When you have a higher score the lender will give you more favorable terms. Over a long period of time, the cost savings can really add up to what you are actually paying for the house.
If you need to bump up your credit score, it would be worth looking into using a company like Credit Karma. They will help you make the right credit choices so your scores improve quickly. The best thing about Credit Karma is the fact it’s free to use.
Not Shopping Around When Looking For a Lender
People are in so much of a rush to get preapproved for a mortgage and begin shopping around for their perfect home. They forget to actually shop around for something else, which is just as important: picking their mortgage lender. Making sure you’re getting the best deal will allow you to keep extra money in your pocket for things that are going to be useful down the line, like getting brand new furniture for your new master bedroom.
Rushing Into Things
People are so focused on finding a home and signing on the dotted line that they forget about all the other little things that go into buying a home, such as down payments and closing costs.
When you’re a first-time buyer, you’re going to need to sit down and figure out ALL of the costs inline with your budget, so you know how much house you can actually afford as well as any additional costs that go along with this. Don’t forget about the cost of your furniture too!
Focusing Too Much on The House and Not Enough on The Neighborhood
Anyone buying any home has their own checklist of things they want and don’t want to be included in the property, whether that’s 4 bedrooms, 2 bathrooms, wooden flooring, and green colored tiles in the kitchen.
Whatever it may be, we all have things we REALLY want in a home so that it’s as perfect as possible the day we move in. Though the problem with this is, we get fixed on these things too much and overlook WHERE the property is actually located.
Buying the perfect home in a neighborhood we don’t want to live in will eventually turn that perfect home into a disaster home you’ll want to escape as soon as possible. Many first-time buyers will look for a healthy neighborhood, the kind where walking is easy, or there is a gym close by, among other things. So don’t be like the other first-time buyers; consider the property’s location as much as you would its aesthetics.
Making Key Decisions Based on Emotion
Buying a home is one of the key achievements’ in anyone’s life, alongside getting a job you love and raising a family you care about, but just like these things, you can’t strictly make decisions based on how you’re feeling.
Many first time home buyers get to easily attached to a property, meaning that they rush through the process to ensure no one else can get their dream home, doing so whilst overpaying for a home they really really love while stretching themselves beyond their budget.
Overlooking Loan Programs That Can Help
Many first time buyers believe they just need to make small payments on their mortgage, like everyone else who buys a home. The problem is, they completely neglect the fact that there are plenty of government loan plans out there that can help them get the money they need to pay for their home, so it’s a lot more affordable and far less stressful than going at it alone.
Some of the loan plans worth looking into include VA Loans, USDA Loans, FHA Loans. VA and USDA mortgages are both no money down loans, so if you qualify, coming up with a down payment will be one burden off your plate.
In order to get a VA loan, you do need to be serving or have served in the military. With a USDA loan, the home you want to buy will need to be located in a rural area. FHA loans are one of the most popular financing options for first time home buyers because of their low down payment requirement of 3.5%.
Having No Money For a Rainy Day
When people buy a home, they consider all the little hidden costs such as moving, property tax, and closing fees; but they always forget to have money for a rainy day. This is extra important if you’re buying a previously owned home as it is inevitable that some part of the house will need work on it.
Even if it’s a brand new home, anything can break at literally any time. And if you’ve already emptied your bank account to pay for your brand new home, then you’re going to have damage on your hands with no money to fix it.
Miscalculating Your Budget For Renovations
There is a small chance that the home you’re looking to buy is going to be absolutely perfect in every way for you, because of this, it’s more than likely you’re going to need to change somethings here and there, so the home works for you.
One of the big mistakes homebuyers make is that they forget to properly calculate their renovation plans, forgetting to absolutely make sure that they have all the money they need to transform their home. So, in the end, they’re sleeping on the bedroom floor for a few months until they get some more money to help finish up what they started.
Final Thoughts on Buying a Home For The First Time
Buying your first house is a huge step in one’s life. Understanding what to know when buying a first home is critical and then acting on it is essential. Being prepared will put you in the best position not to make home-buying mistakes.
By having a team of professionals working with you, the odds of making some kind of blunder will go down tremendously. Best of luck on your home buying journey.