7 Common Mistakes That First Time Homebuyers Make
Purchasing a new home is exciting, but there are some things you need to know before you start looking for your dream home. Here are seven common mistakes that new homebuyers make and how to avoid them.
Looking at houses outside their price range
There are so many homes for sale. Knowing where to start can be difficult. Speak with a professional real estate agent or mortgage broker to pre-qualify for a loan. Knowing your price range will save you from the disappointment of falling in love with a home that’s too expensive.
Not working with a professional real estate agent
The purchase of a new home may be the most expensive purchase you will ever make. It’s too important not to consult a professional to help guide you through the process. Well-meaning family members and friends may offer advice, but may not have experience in the real estate market. Look for a real estate agent who specializes as a buyer’s agent.
Failure to get a new home inspection
Builders hire subcontractors, such as electricians, plumbers and roofers. Some subcontractors may take shortcuts and make mistakes that are not discovered until they cause problems later. With a home inspection, problems can be identified and corrected before you close on the loan.
Making a large purchase before the loan closes
While waiting to close on the loan, you purchase the perfect bedroom furniture set in a holiday weekend furniture sale. A pre-closing credit check reveals the purchase and the bank cancels the mortgage loan or changes your interest rate. Remember, it’s not over until it’s over. Don’t make any large purchases before you close on the loan.
Not selecting the right type of mortgage
There are different types of mortgages, such as Conventional, VA loans and FHA loans. Typically offered is a thirty-year fixed mortgage, but a ten year or twenty year mortgage could save you thousands of dollars. It is important to do your research and choose the right mortgage for your particular financial situation.
Lack of understanding of an escrow account
A portion of your monthly mortgage payments will be placed in an escrow account. At the end of the year, these funds are used to pay the county taxes and home insurance. As a new home buyer unfamiliar with escrows, you may find your mortgage payment higher than you expected. If you opt not to include the taxes and insurance, you must budget properly so you will have the money to pay them when they become due.
Failure to budget for future expenses
Don’t forget other expenses. New home owners mistakenly put all of their savings into purchasing the home. You should plan for items not included in the contract like window blinds and backyard fences. You also need to budget for future home maintenance expenses.
Now that you know the seven common mistakes that new homebuyers make, you can avoid them and shop for your new home with confidence.