Shopping for your first home is an exhilarating process. Will this be a good place to put down roots? Will it meet your long-term needs? What maintenance tasks will need to be addressed right away and what updates or remodels will you do?
We want your first home buying experience to be a positive one, so we’ve put together a list of ten of the most common mistakes first time buyers make. Avoid these potential pitfalls and you’ll be well on your way to a no-regrets purchase.
- Not knowing your credit score—Your credit score will affect the kind of mortgage you can get. Before you contact a realtor, get a free copy of your credit report from one of the three nationwide credit reporting companies (Experian, Equifax, and TransUnion). Check closely for errors or discrepancies and give yourself enough time to dispute them if you find a problem so that you won’t experience any hang-ups during the loan approval process.
- Not getting preapproval—Money Street Mortgage allows you to apply for loan approval online before you have chosen the house you plan to buy. Preapproval gives you more bargaining power and also demonstrates to the seller and real estate broker that you are a qualified buyer. It also gives you a specified price range for your purchase, making it easier to stay within budget.
- Borrowing the maximum amount you can—It’s easy to be overly optimistic about how large a payment you can actually afford. Your monthly payment should represent about 25-30% of your take home pay. Don’t forget to factor in future expenses like home repairs, utilities, and a reserve for when the water heater goes out.
- Shopping for too much house—Plan your budget before you go house shopping and be firm about sticking with it. A mortgage payment that eats up too much of your take home pay will put financial strain on your family and may end up costing you your home. Our mortgage calculator will help you determine how much house you can afford based on your desired monthly payment, interest rate, and the term of your loan.
- Ignoring the Housing Market—It’s tempting to buy when the time is right for your personal circumstances without considering the state of the housing market. In addition to personal and financial considerations, however, try to purchase when the market is favorable to buyers. A buyer’s market means that there are more houses available than there are buyers and that both prices and interest rates will be lower. Keep an eye on the Housing Market Index to determine whether it’s a good time to buy in your area.
- Forgetting about additional costs—As you plan your budget, remember to include additional costs such as the appraisal fee, homeowner’s insurance fee, closing costs, and home inspection. These costs can add up, so don’t overlook them in your financial planning.
- Choosing your lender blindly—When you choose a mortgage lender, look for someone you trust to answer your questions and provide stellar service. At Money Street Mortgage, we make customer satisfaction our priority and we promise to get the best rate possible for your mortgage. We are competitive by nature, and that translates into better rates and faster closings for our clients.
- Skipping the home inspection—The house may look beautiful on the outside and it may have a huge kitchen and four bathrooms, but you can’t always see what lies behind the walls and under the floor. A home inspection will look for cracks in the foundation, mold in the basement or crawl space, faulty wiring, gas leaks, dry rot, and numerous other problems. An inspection will cost you around $400-$500, depending on the size of the house and its location.
- Not being flexible in your requirements—It’s wonderful to make a wish list of things you’d like to have in your home, but it’s also important to remain flexible. If every “wish” is a deal breaker, you may not be able to find a home in your price range that meets your expectations.
- Not checking your emotions at the door. All your careful plans may go out the window when you step into that beautiful living room with the cathedral ceilings and spectacular view. If you’re not careful, your emotions can run away with you, leading you to make a purchase decision you’ll regret later. Don’t let that happen to you! Stick with your budget, get the home inspection, and be flexible.
When you’re ready to buy, Money Street Mortgage is here to help. Our goal is to help you find the right loan, get the best interest rate, and receive loan approval quickly. Call us today to find out how we can help you purchase the home of your dreams.