Biggest First-Time Homebuyer Mistakes
While being a first-time homebuyer is an exciting process, it can also be extremely difficult at the same time. Make sure you don’t have any future regrets by avoiding a few of the biggest mistakes first-time homebuyers often make listed below.
Buying More Than You Can Afford
When shopping for a house as a first-time homebuyer, it’s important to make a realistic budget that determines how much you are able to pay each month to avoid future financial frustrations. A general tip is that mortgage payments generally shouldn’t be more than 28 percent of your monthly gross income. However, it’s important to include factors such as debt and needed renovations when you’re developing your budget. Additionally, try to avoid attending open houses for homes that are out of your price range so that you don’t fall in love with a place that you can’t afford in the end.
Not Getting Preapproved
A mortgage preapproval provides you with the knowledge to know exactly how much you can borrow from a lender in order to buy a home. Preapproval allows lenders to take your income, credit, debts, and assets into consideration to see if you qualify for a mortgage and how much it will cost. Furthermore, preapproval allows sellers to view you as a more serious homebuyer which ultimately makes the process of paperwork move faster so you can enjoy your new home as soon as possible.
Overlooking Extra Costs of Home Ownership
Apart from the mortgage process and down payment, first-time home buyers tend to skip over additional expenses such as closing costs and home inspection fees. Upcoming monthly payments including homeowner’s insurance, property taxes, and regular maintenance are often left out of budgets as well. Additionally, fees for a homeowner’s association or co-op board are important to take into consideration along with the likeliness of your property taxes increasing depending on where you live. It’s important that all of these costs are accounted for outside of the general budget for your dream home.
Choosing the Wrong Lender
Lastly, having a mortgage lender who has your best interest in mind is crucial to the home-buying process. You want to have a lender that takes the time to explain all of your options for a down payment, mortgage terms, and any other financial considerations that are important for you to consider. A good lender should help you save money and prevent you from any high-risk future financial situations.