Buying your first home is an exciting feat, but it is also a significant and overwhelming decision to make. It’s easy to get caught up in the excitement of home shopping and make beginners’ mistakes.
To ensure a smooth home purchase, here are some things to avoid:
Mistake #1: Home Shopping Before Applying for a Mortgage
The first mistake you can make as a homebuyer is looking at properties before getting in touch with a mortgage lender. Housing inventory remains tight because there’s more demand coming from the buyers than affordable homes on the market.
Because of this competition, you may lose a property if you don’t get preapproved for a mortgage. You may also not have a realistic budget assessment if you don’t talk to a lender now. So you might just end up looking at homes you can’t afford or find the home you love, apply for a mortgage, and find out it’s off the market already.
Mistake #2: Talking to Just One Lender
You may think about accepting the conditions to a mortgage loan from the first lender you talked to, but that may be another significant mistake you can make. You might be leaving thousands of dollars on the table.
If you shop around lenders, you’ll have a basis for comparison. That way, you’ll get the best deal and the lowest rates possible, something you won’t get to explore if you get the first mortgage loan available to you.
Mistake #3: Rushing the Process
Purchasing a home is a big decision that involves a complex process, especially when you get to the little details. If you rush the buying process, it might end up costing you later. So bide your time.
Rushing through the process may mean you can’t save enough for a down payment and closing transaction costs. You may also fail to address items on your credit report that could stop you from getting better loan terms.
Mistake #4: Draining Your Savings
Don’t make the rookie mistake of spending most or all your savings on the down payment and closing costs. You might think you’ve avoided the more significant part of the finances by making the 20 percent down payment and avoiding mortgage insurance, but being left with little to no savings is a bigger financial problem.
Sure, you will no longer pay for mortgage insurance as long as you make the 20 percent down payment in a traditional mortgage. Usually, that means you get substantial savings from your monthly mortgage payments, but having no savings means you’re living on the edge. That is never a good financial decision.
Mistake #5: Focusing on the Home More Than the Neighborhood
Every homebuyer wants to find their dream home with their dream aesthetics, style, furnishings, and whatnot. But if you’re too picky about your home’s appearance, you might not realize that it’s in a neighborhood you hate.
Selecting the right location, especially the town you move into, is critical. You want to find someplace where the culture and the values of the area match yours, or else you’d find yourself wanting to leave after a few months or years. You can always change and remodel your home, but never the location.
Getting your dream home may be a complex, overwhelming, and risky process, but being mindful of these rookie mistakes will save you stress after the purchase is complete. So be sure to avoid these pitfalls as you buy your first home!
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