Planning on buying your first home? While it may seem tedious and daunting, house hunting can also be an exciting experience. As a buyer, your primary goal is to find a home you love at a price you’ll be able to afford. Unfortunately, there are many first-time buyers who tend to commit mistakes, making it difficult for them to attain their goals.
Here are a few tips on how to avoid making costly mistakes when buying your first home:
- Not applying for a mortgage because you assume you won’t get approved – To successfully borrow money for a home, you’d ideally need an excellent credit score, have as little debt as possible, and a 20% down payment. Buyers with less nowadays can qualify for loans in today’s real estate market, thanks to several options such as Federal Housing Authority loans, which are designed to help out first-time buyers.
- Going to only one lender – Lenders offer substantially differing rates and fees, as well as a variety of loan products and service levels. It’s a wise decision to talk to different lenders, so you can canvas your options. Be sure to get in touch with an online lender, a credit union or regional bank, and a big bank.
- Failing to get pre-approved during the early stages – A mortgage pre-approval serves two primary purposes. First, it will allow you to gain a clear idea of how much you’ll be able to afford. Second, it serves as an indication to sellers that you’re a serious buyer, which gives you a slight advantage over all-cash buyers.
To ensure a smooth pre-approval process, be sure to prepare by collecting relevant financial documents such as tax returns, bank statements, and pay stubs. Check your credit report as well for any potential errors.
- Stretching your credit limit – Avoid getting carried away by borrowing the maximum amount set by your lender. When you stay below your mortgage limit, you get more financial flexibility to pay for additional purchases which come with buying and owning a home. An ideal budget should cover monthly housing expenses, so be sure to put that in consideration when trying to figure out exactly how much you should borrow.
- Allowing decisions to get influenced by your emotions – The home buying process can become a frustrating and time-consuming process. Affordable starter homes are always in high demand these days, and many first-time buyers typically experience rejection on their first several offers. That said, many first-time buyers can easily fall into the trap of pursuing a house that’s out of their budget, or get entangled in a bidding war that ends with them paying more than they initially expected.
Getting excited when you think you’ve found the perfect home is perfectly ok – just try not to get yourself in a difficult financial situation.
For more helpful tips on home buying, take a look at our previous articles here. If you need help looking for homes for sale in Chagrin Falls or other surrounding communities, call me at 440-823-2448 or send me an email at michellemcquade(at)howardhanna(dotted)com.