Many people look forward to buying a home. However, some people end up making the same mistakes that their parents, friends and siblings made. There are several things that you can do to stop this cycle. The following is a list of mistakes that you will need to avoid. Shopping for a Home Before You
Many people look forward to buying a home. However, some people end up making the same mistakes that their parents, friends and siblings made. There are several things that you can do to stop this cycle. The following is a list of mistakes that you will need to avoid.
Shopping for a Home Before You get the Mortgage
It is a good idea to get pre-approved for a mortgage before you go shopping for a home. Finances typically are not a fun topic to discuss. Many people think that it is fun to look at houses. That is why many of them will look for a home before they get their finances in order.
Many of these people end up disappointed because they find out that their dream home is out of their price range. That is why it is a good idea to get pre-approved before you start looking for a home.
Your expenses and income will be reviewed during the pre-qualification process. Many real estate brokers will want you to get pre-qualified before looking for a home. They do not want to show you homes that you will not be able to afford.
Not Getting Professional Help
If you are a first-time homebuyer, then you do not want to go through this process alone. You will need the help of a real estate agent or broker. You may also need an attorney. A professional will be able to give you independent advice. They can also guide you throughout the entire home buying process.
Not Looking for a First-Time Homebuyers Program
If you are a first-time homebuyer, then you may not have a lot of money saved up. You will have to make a down payment and closing costs. Many people think that they will have to delay getting a home if they do not have a down payment saved up. However, there are several programs available to help you.
You should talk to your lender about the different options that you have. The Department of Agriculture and Veteran’s Administration have programs for first-time homebuyers. You may be able to get a loan without a down payment. The Federal Housing Administration has a program that allows you to get a loan with a down payment of 3 percent. Keep in mind that that the average down payment is around 20 percent.
Using All of Your Savings on a Down Payment
You may have saved up your whole life for a down payment. However, you should not put all of that money towards your down payment and closing costs. This is a bad idea because you need your savings.
Many people like to put down a 20 percent down payment because they do not have to pay mortgage insurance. This can help you save a lot of money on your mortgage. However, it is still a bad idea for you to do this. You do not want to choose saving on your mortgage over having a rainy day fund.
Ignoring All of the Drawbacks of a Home
There may be a lot of attractive qualities about the home. However, you should not ignore the downsides of it. The downsides may not seem like a big deal right now, but they may become an issue once you move into the home.
That is why it is a good idea to look at 10 to 20 houses before you make an offer. Write down a list of things that you like and dislike about the house.
Studies have shown that first-time homebuyers are more likely to overpay for a home than those who are experienced. You can avoid this mistake by having a real estate agent do a competitive market analysis. This allows you to compare the home that you want to buy to the other homes in the area.
Not Doing a Home Inspection
It is not a good idea to buy a home without an inspection. The home may have issues that you are unable to see. Many people do not realize that the home has problems until they move in. You will need to hire a home inspector before you move in the home.
Underestimating the True Price of Owning a Home
The mortgage is not the only cost that you have to worry about if you have a home. You will have to pay for utilities, cable, internet and maintenance. If something is broken, then you will also have to pay to get it repaired. A financial advisor can help you set a budget so that you will not end up spending more than you can afford.
Applying for a Credit Card
It is not a good idea to apply for a credit card before your mortgage closes. The lender will take your credit score into consideration. If you apply for a credit card, then your credit score will drop by a few points. This can delay your closing. It may also cause your mortgage to get canceled.
Missing the First Mortgage Payment
It is common for first-time homeowners to miss their first payment. You will need to take note of your due date when you close on your home. Missing one payment can ruin your credit.