Purchasing a home requires an individual to make many decisions, which can be both scary and exciting. Every year, people intending to buy their first homes make mistakes that their friends or parents made when they purchased their first houses. That’s because the whirlwind of home shopping can quickly sweep you and make you forget doing some essential things you shouldn’t leave out.
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One way to avoid these mistakes is to work with a professional like a land for sale officer and equipping yourself with knowledge. These two will save you from making mistakes that may lead to regrets. This article lists some homebuyer mistakes you should steer clear of.
- Viewing Homes Before Applying For A Mortgage
The excitement of being a new homeowner makes some first time home buyers search for a home before visiting a mortgage lender. Though this isn’t a bad thing to do, you may end up wasting your time. Most markets’ house inventory is currently tight, and buyer demand is higher than the homes on the market.
If you search for a home and happen to find one before being pre-approved for a mortgage, you may end up losing the property to another buyer who already has the cash to pay. Not having a mortgage may also prevent you from picturing your budget. At the end of the day, you may end up depending on the house’s price to set your budget instead of letting your budget determine the house you want to buy.
If you’re lucky enough to find the property, you may end up buying a home that you can’t afford. Therefore, it’s essential to get an underwritten mortgage preapproval before starting to search for your dream house. The preapproval will not only help you know your monetary limits, but it’ll also present you as a serious buyer who has a good finance and credit history.
- Talking To A Single Lender
Some first time home buyers make the mistake of only contacting a single bank or lender. This may make you lose thousands of dollars. Homebuyers who shop around are likely to get better deals with the lowest rates possible.
It’s advisable to find at least three lenders and compare their loan terms, lender fees, and rates. Be careful not to discount lender responsiveness and customer service because they’re vital in the smooth running of the mortgage approval process. It would be best if you also were careful about very low interests because they may end up not being genuine as they appear.
- Buying A House You Can’t Afford To Finance
Falling in love with elegant homes that stretch your budget is normal. However, it isn’t a good idea. Your budget should determine the house that you purchase because buying a house you can’t afford to finance may make you risk foreclosure, especially if you’re facing a financial crisis.
You’ll also not have money to finance your monthly expenses and bills. Therefore, before settling for a home, focus more on a house that’ll enable you to take a loan you can afford to pay. Your qualification for a higher loan doesn’t mean you’ll afford to pay the monthly installments and other financial obligations. Every individual’s situation is different, and it’s vital to consider your financial profile when selecting a house to buy.
When applying for a mortgage, ensure you’re honest with your mortgage broker or lender about your finances. Don’t allow them to make you apply for a loan you can’t afford to repay.
- Depleting Your Savings
One of the most major mistakes that first home buyers make and that you should avoid is to spend every penny you saved on the down payment and closing expenses. Some people do that to avoid paying for mortgage insurance. However, it’s risky because it’ll leave you with no savings.
That may affect how you live after you buy your home. If your mortgage lender starts deducting monthly installments from your salary, your monthly budget will also have to reduce. However, If you had some savings, you could cushion this shock for some time. On the other hand, if you deplete your savings, you may have to struggle within the first months after buying your dream house.
It’s advisable to save at least six months of living expenses after closing a deal. This emergency fund will help to cushion your monthly budget as you get used to living within your reduced financial ability.
- Not Caring About Your Credit
Almost every mortgage lender checks credit reports before preapproval and closing to ensure your financial profile is constant. That means that if you apply for new loans or credit card accounts, you may end up jeopardizing the mortgage approval and closing.
As a rule of thumb, once you apply for a mortgage, it’s advisable to maintain your financial status quo from the preapproval to the closing stage. Avoid closing existing accounts, applying for new credit cards, making large purchases, and applying for new loans in the months leading to your closing day.
Real estate experts also advise that if possible, you should reduce your existing balance up to 30% of your credit limit and pay your utility bills on time every month.
- Using Emotions To Make Decisions
Purchasing your dream house is a significant milestone. Your home is the place that’ll help you make history and memories. Because of this, you may find yourself making emotional decisions. However, these decisions have led some first-time homebuyers to bid for homes that they cannot pay.
This is a mistake you should avoid because it may not only make you stretch beyond your budget, but it could lead you to overpay. It’s essential to write down a budget that you can follow religiously. While making decisions, you shouldn’t be attached to the elegance of a home. Instead, it would help if you considered other factors as well.
The Bottom Line
If you’re planning to buy a new home, you’re on the right path to making a great accomplishment. However, home buying involves many processes that must be followed to be successful. Arming yourself with the right knowledge can prevent you from making mistakes that will make you regret.
