The first time you purchase a home can be very intimidating and exciting. The best way to maneuver through all the potential pitfalls is to be aware of some of the mistakes that other first time home buyers have made, especially in today’s supercharged housing market.
What is a common mistake to avoid when buying a home?
Buying too much house is the most common problem. From the beginning it is important to figure out how much house you can really afford and this is different than how much you might qualify to borrow. The cost of owning a home is more than just the loan payment, there will be new taxes, increased insurance costs plus higher utility expenses and new expenses for maintaining your new home.
Is there a step to take before beginning the buying process?
Before even talking to a mortgage professional it is important to review your credit history and correct any errors. You can obtain free copies of your report from all three major credit reporting agencies. It is important to get all three because most mortgage lenders use what is called a tri-merge score where all three agency reports are viewed.
Why is it important to choose the right mortgage lender?
As a first time home buyer you might be eligible for many different programs that include down payment assistance or lower down payment options. This includes looking at USDA loans, FHA loans and VA loans plus programs offered by local organizations through your lender. You should also talk to a couple of mortgage lenders before settling on one that will offer the programs and service you desire.
What is a common mistake when people attempt to buy a fixer upper?
Too many people when it’s their first time doing this miscalculate repair and renovation costs. Adding to the problem could be that you have used a large portion of your savings as part of the down payment. Always get 3 estimates and especially during this current inflationary times give yourself a large contingency budget because you need to always prepare for there to be delays and cost overruns.
What is the biggest mistakes to avoid?
Using all of your savings to make the biggest down payment possible. Without an emergency fund cushion, any unexpected house repair would require you to use credit. Additionally, any disruption of income might cause other financial harm. It is important to have even a small emergency fund when you become a homeowner because owning a home is costly beyond just the payment.