There are several factors to consider when buying a home. For seasoned veterans, it can be reasonably easy to navigate the landscape and select the ideal home. That may be difficult to do for first-time home buyers.
What are some home-buying don’ts to avoid if you’re buying a home for the first time? Below are a few of them.
Looking at homes before mortgage discussions
It can be easy to get demoralized during home buying, especially for rookie homebuyers.
One moment you could be excitedly going through new homes in a posh neighborhood. Then next thing you know, your lender tells you that based on the state of your finances, you’ll have a hard time paying for a particular home.
That’s why real estate professionals often recommend that you first talk to a mortgage lender before checking out houses. Mortgage pre-approval can put you in an excellent position to make a firm offer. That is because the amount that you pitch has gone through lender review — which takes into consideration all your income sources and expenses.
Know where you stand and what you can afford, the rest will follow along.
Pursuing a purchase without first-time home support
Not many first-time homebuyers are fully prepared to shoulder the full cost of mortgage and down payments. That’s why there are down payment assistance programs; some are offered by state and have relatively decent mortgage rates for first-timers.
However, not many people know these options exist — let alone do the research. You could be making a bigger down payment and not be saddled by a big loan.
Whichever lender you go with, make sure to ask the representative about the first-time buyer programs at your disposal. Each option has different pros and cons.
For instance, If you prefer not to make a down payment, a loan from the Department of Agriculture or Department of Veteran Affairs waives the requirement.
Selecting the smallest down payment available
This option is on a case-to-case basis. While there are instances where it’s a good deal to go with 0 or 3 percent down payments, it’s not a hard and fast rule.
In some cases, you can stand to benefit more if you make over a 10 percent down payment. There are two main advantages to this.
First, monthly home payments become a bit more bearable since you already invested a huge chunk at the start. Second, you can avoid potential price and mortgage rate increases down the line.
That is just the reality of the home market, and as rates increase, you could find yourself in an increasingly difficult situation to successfully pay off your home. According to industry experts, it’s common for first-time homebuyers to spend over three years saving up for down payment.
Failing to consider the full costs of homeownership
However, aside from the mortgage, there are other costs that first-time buyers have to take into account. Some of these costs include electrical installation repairs, cable subscription, homeowner association fees, and future home improvements.
For some, it may be better to stick to renting for a few more years. That is where a reliable real estate agent can help you comprehend the full costs of homeownership.
For instance, professionals can help you find out a seller’s monthly or annual energy bills so that you get a better picture of what you’re buying.