The idea of having your own place to call home is exciting.
You have freedom to customize your new place any way you like.
A new home is typically the start of a new chapter in your life, especially for people starting a family together.
However, there are many common first time home buyer mistakes to avoid.
This article covers these mistakes and helps in making your first home shopping experience a success.
6 First Time Home Buyer Mistakes and How to Avoid Them
Shopping for your first home can be fun, but it can also be scary and overwhelming. But if you know the common first time home buyer mistakes to avoid, the whole process can be incredibly exciting.
You can purchase the home you love without having to spend too much or go through constant financial stress.
Be cautious of the mistakes listed out below to get the best experience and deals in owning your first real estate property.
Mistake No. 1: Failure to Know What You Can Afford
Are you financially ready to purchase your very first property?
Not knowing what you can afford is one of the most common mistakes a first time home buyer makes.
Take an in-depth look at your budget. Generally, mortgage payments should not be more than 28 percent of your net disposable income.
If you still have a lot of debt, you are not yet ready to invest in a property.
Having car loans, credit card debt, and student loans already put you in a lot of debt. Investing in a property with these debts added on is not a wise financial move.
Mistake No. 2: Lack of Control over Your Personal Finances
You can never assume that you will have more income in the future to finance your home purchase in the present.
Most lenders will evaluate your personal income, including your credit score, before approving a mortgage.
Take time to check your current financial status.
- Prepare your financial statement documents
- Check your credit report
- Review your financial profile
Having a solid understanding of your personal finances allows you to properly evaluate your financial standing. Doing this prior to buying a property prevents you from stretching your finances to their limit.
Mistake No. 3: Skipping Home Inspection
Some first time home buyers skip home inspections to avoid added expense.
However, not doing your home inspection can bring unexpected closing expenses and maintenance costs which are far above your budget.
Hiring a professional inspector, especially when buying an existing home, helps in finding and predicting repairs you can’t necessarily see. Knowing these conditions allows you to negotiate with the current homeowner to address repairs or to get you a nice discount.
— YourHome1Source (@YourHome1Source) May 28, 2017
Mistake No. 4: Completely Trusting Online Loan Reviews and Quotes
Looking for a lending company online that may help you secure a home loan can be done. This saves you time and effort, but it is not 100% accurate.
Ownership terms and costs can differ from one lender to another and may not be disclosed completely on their websites.
To avoid problems, visit the lending companies personally and inquire about their services. Hiring a real estate agent is generally advisable. They can help you navigate the process as well as answer any questions about your intended purchase.
— Kim Cunningham (@kcunningham2013) May 22, 2017
Mistake No. 5: Failure to Provide Overhead for Closing Costs
Your down payment is not the only significant amount you should prepare for when buying a new home.
First time home buyers should allocate funds for closing costs, such as title insurance and attorney fees.
This amount is around 2 to 5 percent of your home’s purchase cost.
Mistake No. 6: Overlooking Other Additional Expenses that Come with Home Ownership
Buying a real estate property is a huge financial decision because of the amount of money you need. Besides your initial down payment and closing costs, there are still additional expenses on top of your monthly mortgage payment.
As a new homeowner, you will be required to pay for property taxes, regular maintenance, homeowners association fees, and home insurance.
This amount should be included in your budget computation together with your monthly premiums to know if you are indeed financially capable of paying for your dream home.
Still worried about financing your dream home? You might want to secure a home loan. Learn how from DSpacesTv’s video:
Knowing the most common mistakes which many first time home buyers make and how to avoid them will make your home purchase a success and an accomplishment worth celebrating.
It’s easier to invest in a new property if you take the right steps to make your first time experience a smooth one.
How was your first experience buying a home? We love to hear your thoughts in our comments section below!
Still looking for a home loan perfect for your needs? Check out this article on FHA vs Conventional Loan: Which is Your Best Option? to learn more!