Every new homebuyer runs into questions and challenges that are hard to predict as they move through this first experience. Check out some of the most common mistakes that first-time homebuyers run into, and how to avoid the same situations in your homebuying journey.
Buying more house than you can afford
This one may seem obvious on the surface, but many new homebuyers overestimate what they can afford to pay for a home and underestimate what it costs to actually live in the home. The down payment and monthly mortgage, tax and insurance rates include just one set of numbers to calculate the overall cost of the home. Other expenses like renovations, repairs, electricity, heating/cooling, cable/internet, water, property maintenance and trash removal should be factored into the living expenses and monthly bill planning.
Forgetting to check your credit
The mortgage loan rate you are offered often depends partially on your credit score. While uncommon, your credit history may contain errors that affect your total credit score and loan options. You can avoid this issue by requesting a free credit report on a regular basis (yearly is a good target), and by disputing any mistakes or issues you see.
Ignoring first-time homebuyer programs & incentives
Some people avoid becoming homeowners because of the misperception that a large down payment is needed, or simply because they think they cannot afford to buy a home. Before you count yourself out of the homebuyer club, take a look at federal and state programs and incentives offered to new homebuyers. Some lenders even have local programs and special rates that you can take advantage of.
Emptying your savings
It’s never a good idea to put all of your money into any one investment, especially the purchase of a new home. Something will always come up, whether related to the home or just in the natural course of life, that you will need to pay for or save toward. Examples could include finding a leak in the roof after you move in, or realizing the furnace needs an upgrade to effectively heat the home this winter. Leaving a cushion in your savings can help alleviate the stress of unexpected expenses, and can give you peace of mind as you navigate owning your own home.
Looking at homes before reviewing mortgage options
One of the most exciting steps in the process of buying your first home is visiting homes for sale. However, before you step foot in an open house, talk with a mortgage representative about your finances and options. Many sellers will require pre-qualification or pre-approval assurance from a mortgage lender to consider your offer valid. Starting with this step can help to avoid slowing down the offer process, and it can also help your offer to be more competitive against others who have skipped this first step. Your local Summit Mortgage Team is ready to help you review your mortgage options so that you are ready to make an offer on the home that is right for you.