Many first time homebuyers tend to rush through the process because they are eager and make decisions based on emotion. This can lead to careless mistakes. Here are some of the most common mistakes that new home owners make and how to avoid them:
The first step in buying a home is to figure out a price range and stick to it. It is not uncommon for lenders to pre-approve you for more than your budget. So if you haven’t already, decide up front how much of your income you want your monthly mortgage payments to take up. You should also be thinking about the lifestyle you plan to have in the future. Do you want to have a baby; do you plan to go on a lot of vacations; do you plan on upgrading your home in 5 years? These are questions you need to ask yourself before buying a home.
When finding the best lender, you want someone who is going to educate and guide you. You must shop around and resist the urge to settle for the first person you meet. Consider different options, ask each of them about rates, loan terms, down payment requirements, property insurance, closing cost and fees of all kinds. Once you have interviewed at least 3 mortgage companies, compare each one to find the one that makes the most sense to you.
To make sure that nothing has changed in your financial profile, lenders pull credit reports at pre-approval and again just before closing. This affects you because newly opened loans or credit card accounts on your credit report can jeopardize the closing and final loan approval. The best thing to do is stick to what you have done in the past and don’t open new credit cards, close existing accounts, take out new loans or make large purchases on existing credit accounts in the months leading up to applying for a mortgage through closing day. Pay your bills on time and in full every month and pay down your existing balances to below 30 percent of your available credit limit.
The neighborhood you live in is arguably more important than the house itself. A home may check off all of your boxes, but you could wind up loving your home, but hating your neighborhood. The neighborhood you live in is critical to your life and family development so do your best to find an area that matches your culture and values. To make sure you don’t make this mistake – ask your real estate agent to help you track down stats about the neighborhoods you are looking at such as neighborhood safety stats and school ratings. Calculate how long your commute is to work/school, and consider things like proximity to public transit and walkability. Additionally, don’t just visit the neighborhood once. Get a feel for it at multiple times of the day to get a sense of traffic, neighbor interactions and the overall feel of the neighborhood to see if it’s a good fit. Also, if you plan on upgrading your home at any point, the neighborhood will affect your resale amount.
First-time home buyers often are shocked by the high costs of repairs and renovations. Their perspective may be distorted by reality TV shows that make renovations look cheaper, faster and easier than they actually are. Or, they get a repair estimate from just one contractor, and the estimate is unrealistically low. To avoid this dilemma, it’s best to assume that repair estimates are low and that most renovation costs are high. Also, the job may take longer than the contractor anticipates.
Like any big project, a successful home-buying experience is all about getting the details right from start to finish. These tips will guide you to avoid common mistakes and ultimately help you find the home that best fits you!
Brought to you by Tara Schumann, Social Media/Marketing Manager for TJC Real Estate and Management Services.
Your Neighborhood Realtors® Since 2005