Whether you’re buying your first home or the 10th one, there is always room for mistakes. Buying a home is a big decision, so you have to avoid all the mistakes most people make for a seamless experience.
Buying a new home can be a tricky process, especially when you’re making a purchase like this for the first time, or are buying a home after a long time. In that case, having a thorough knowledge of the market and the help of a buyer’s agent is a must. Here are some of the most common first time home buying mistakes that you should avoid.
Not Applying For a Mortgage Beforehand
Failing to apply for a mortgage before looking for affordable homes on the market is a big mistake that many of the first time home buyers often end up making. This might seem like a small mistake, but can cause you to lose a great deal, especially in competitive markets. Available houses in certain areas are very limited, and if you don’t get preapproved for a mortgage before starting hunting for a new home, you might get rejected.
Getting preapproved for a loan has a huge benefit. You can see how much the mortgage provider is willing to offer you, and you can adopt your search according to your budget. So, before starting your search for a new home, try to get preapproved for a mortgage.
Getting the First Mortgage Offer You Come Across
This is also a huge mistake that the first time homebuyers are seen making. They want to get loan fast and end up availing the first one they come across. This can cost you thousands of dollars in the long term.
First time homebuyers should try to shop around and analyze different lenders available in the market before accepting an offer. This increases your chances of getting an excellent offer that’ll save you thousands in the long term.
Buying More Than You Can Really Afford
Getting a mortgage can make buying even an expensive home look easier at first. And with the ever-increasing prices of property, it is easier than ever to end up spending more than you can afford to pay back over an extended period of time.
Monthly repayments on mortgages can be a tough thing, especially if you fall in tough financial times during the repayment period. So, always be realistic and see how much you can really afford to repay on a monthly basis without compromising on other expenses. Always have a back up plan to avoid missing timely repayments.
Not Saving Enough for a Down Payment
Remember that down payment is the only thing that can help you reduce the total amount of mortgage. So, make a proper plan almost 1 to 2 years ahead of buying a home and start saving right away for the down payment. Gather a sizable amount of money before applying for a mortgage and starting to look for homes in the market.
By planning well before making the actual purchase, you can see if your credit is good enough to get you approved for a mortgage, and if not, you’ll have enough time to get your credit repaired and ready for a loan application when the time comes.
Putting All of Your Savings into the Down Payment
Savings are your best way of living a normal life if you end up losing your job all of a sudden. One of the biggest mistakes that first time home buyers are seen making is that they put all of their savings into the down payment of their new home. They do this in an attempt to pay over 20% of the total value of their home in advance and to avoid paying for the mortgage insurance as a result.
While you can really avoid paying for mortgage insurance by making your down payment 20% or more of the total cost, you don’t need to put all of your savings into the down payment and start living on the edge. This is why planning 1 or 2 years in advance and starting to save for the down payment in advance is a good choice for the first time home buyers. This lets you maintain your savings while allowing you to pay for the down payment seamlessly. You should also discuss it with your real estate agent for a piece of good advice.