Do you know that close to 41% of home buyers find it extremely stressful to purchase a home for the first time? The majority of these buyers end up spending way too much on a home that is very much out of their budget. They are not prepared for the kind of installments/monthly payout that the loan requires them to make. What happens then? They end up taking out another mortgage to finance the previous one. That is a lot of debt that you can do without. Before the year ends, let’s have a look at some of the most common mistakes any Home Buyers is prone to making and how simple it is to avoid them.
1. Not Knowing How Much You Can Afford
This is one of the most common mistakes that a lot of homeowners are prone to making worldwide. It happens in every country and city when a potential Home Buyers just forgets to assess how much he/she can afford when it comes to purchasing a house. People usually end up looking at several houses and then realize that they cannot even afford that much in the first place.
If you are making the same mistake, you are going to waste a lot of your time. If you are a first-time homebuyer, your goal should be to get a home that fits well within your budget. It should not make you stretch way out of your limits regardless of whether you choose to finance it or not. Several times, it is a better idea to just aim low and keep your finances intact. The home loan that you can secure should come with a comfortable monthly payment. It all happens when you begin by assessing your budget.
2. Forgetting To Compare Your Quotes
Compare the quotes that you have received on several properties from numerous agents and brokers. The same goes for the mortgage that you might be looking for. Look into their interest rates and the closing costs as well. Ask whether they are going to perform a strict credit inquiry or not. Comparing your offers is the most practical thing to do. Forgetting it might land you in a financial pickle.
3. Not Checking For Relevant Programs
Do you know that there are several first-time home buyer programs in the market? If you are buying a home for the very first time, you do not have a large amount of money saved up for obvious reasons. How will you be able to manage your down payment and closing costs?
The trick is to look for the right homebuyer program before you connect with any home sellers at all. They are going to guide you in the right direction. They will also help you get a loan faster and will guide you through the complexities of competitive mortgage rates and numerous options available in the market.
4. Forgetting About Your Credit Reports
Needless to mention, there will be several banks and financial institutions that are going to carry out a credit check on you. These lenders are going to scrutinize your credit reports thoroughly. This is important if you want to get approved for a loan to buy any kind of property. Make sure that your credit report is accurate. You can also request a free credit report every year from the three main credit bureaus in the country. If you find any errors with them or probably any dispute that you are not aware of, get in touch with your financial advisor or an accountant for assistance.
5. Making A Very Tiny Down Payment
Remember, just making a 20% down payment to buy a home is not going to be enough. A lot of lenders are going to encourage you still, to buy a home with just a 3.5% down payment or no down payment at all. This might seem to be a very good idea but it isn’t always the case.
According to an independent study, close to 11% of homeowners under the age of 35 have agreed that it would have been a great idea had they paid a bigger down payment on their home. This is because it just ensures that you do not have to pay a huge monthly amount from there on out. It makes sure that your finances do not get drained excessively in the future.
6. Picking The Wrong Lender
Talking about picking the right lender, this can get very tricky. Do not make the mistake of choosing a lender just by looking at their big and popular hoardings on the roadside. Do not go solely by online reviews and testimonials. You want someone who can talk with you and build a relationship for the long haul.
Your focus is on finding the best real estate agent but it should not be limited to just that. There is a lot of paperwork involved and several kinds of documentation to be managed. A good mortgage lender is going to have your best interest in his mind. He will be able to come up with multiple options whether it is regarding down payment, a mortgage loan, or any other aspect of a home loan.
7. Being Too Hasty With Your Mortgage
You can never afford to be too hasty with your mortgage. Some lenders would even ask you to name a co-signer. If you have any outstanding debt or probably a not-so-impressive credit history, they would always ask you to bring in a co-signer. It could be a friend or family member as well.
This, however, is a mistake because it means more risk and low reward for both parties. You may be able to get a better rate of interest and a lower fee if you bring in a co-signer. However, if you are not able to make your payments on time, the co-signer will be responsible for the bill. Remember, avoid bringing in a co-signer.
Final Thoughts Work on your credit score. Look for the right lender. Try to remain within your budget. Ask for help from your friends and family members who may have invested in a similar property in the past. Be patient and you will be able to get the home of your dreams very soon.