Buying a new home is wonderful and exciting, but also stressful – especially when you’re buying your first home. It’s a big commitment of money, time, and resources, but also an emotional one. You’re taking on a mortgage, planning to stay in one place, worrying about the future. It’s not easy buying a home, but by avoiding some very basic mistakes, your first purchase can proceed much more smoothly.
- Not knowing your financial picture. This is more than knowing what you have in the bank. You need to get a copy of your free credit report, check out your credit score, and then get moving on making yourself a more desirable prospect for a mortgage. Putting it bluntly, unless you have good or excellent credit, you’re not going to get the best deal possible on a mortgage. Start your home buying timeline when you get that report and then figure up to a year to get your credit in focus.
- Not getting preapproved for a mortgage. Being prequalified is not the same thing as being preapproved. Preapproval shows sellers and agents that you are seriously in the market for a home, have taken steps to get preapproved and are considered a good risk, and that the house is not going to sit around while you chase financing. Think of prequalification as the initial interview for a new job and preapproval for the hire.
- Not being realistic. You need to understand what you can afford and what home prices are in your preferred area. You have things you want in a home, but you also need to be willing to compromise. Put up with a less than stellar yard, but get that laundry room you wanted. The kitchen is new and shiny, but the master bath is totally grandma’s house. There’s a great school nearby, but your commute is going to take an extra 30 minutes. You’re approved for a $275,000 mortgage, but the seller is stuck at $300,000 – do you come up with the difference or pass and move on?
- Believing in too good to be true. It’s a great house, in a great neighborhood, and it’s priced below anything else on the market. Yes, you want to snap it up, you could even skip the inspection and- Hold it right there. If something like this comes up, you should be trying to figure out what’s wrong with the property and not throwing that mortgage money at the seller.
- Not getting an idea of your additional expenses. In addition to the cost of the mortgage, and down payment, you need to consider closing costs and title insurance, homeowners insurance and named peril insurance like windstorm and flooding, and even maintenance. These can take an affordable mortgage payment and leave you struggling.
Don’t rush into anything, because that’s the way to make mistakes. Take your time as you start the home buying process and talk to trustworthy real estate professionals and insurance agents all the way through.