There are many common mistakes first-time home buyers make. Some are minor, while others can end up being costly. Fortunately, several of these mistakes are avoidable. Please read and share this article with other first-time home buyers to help them spot these common errors before making them.
When you shop for a home before approval, you run the risk of falling in love with a home that's out of your price range --ruining the whole home buying experience before you start.
Instead, focus on the finances first. Make sure you have enough saved for a down payment and the closing costs and get your pre-approval before you start home shopping.
Many falsely believe that the loan amount they are approved for accurately depicts how much home they can afford to purchase. However, the income and the debt-to-income ratio data that lenders use to determine eligibility doesn't take into account your monthly expenses like groceries, utilities, gas, or insurance. Instead, use the amount you're pre-approved for as a starting point for calculating your actual "home-owning" budget.
Since a conventional loan is the most well-known mortgage, many forget about the great borrowing opportunities afforded by VA, USDA, and FHA loans. These government-backed loans are often more affordable options, so not inquiring about them could mean missing out on significant savings.
Don't be tempted to drain your savings to come up with enough money to put down on a home either! There are unexpected costs that come with owning a home. So if you don't have money set aside to handle these expenses, you put yourself in a significant financial predicament that could cause you to be unable to keep up with your house payments.
With everything involved in buying the house, many first-time homebuyers oversee the moving expenses. So when you start looking for a home, also start saving for moving costs -including boxes, packing tape, packing blankets, bubble wrap, truck rental, and labor.
Lenders don't just check your credit during the pre-approval process but also just before your scheduled closing day. So if you apply for credit before closing, causing your credit score to drop, your approval could also change. Instead, wait on opening any new lines of credit until after you close. Also, don't close any accounts or be late on any payments, as these could negatively impact your score too.
Now that you're equipped with first-time home buying tips and know what mistakes to avoid, let us help you get pre-approved and jump-start your home buying journey.