First-time homebuyer mistakes to avoid
Shopping for a home is kind of a big deal. It’s definitely stressful for a lot of people, especially first-time home buyers. No one wants to make a mistake when making one of the biggest purchases of their life. The good news is that the world is full of people who were first-time home-buyers once, and through their wisdom we can help you avoid the most common mistakes!
Shopping for a home before getting approved for a mortgage
Imagine going to the grocery store, filling up your cart, and then leaving your groceries at the cash register while you submit a loan application to a lender, hoping they’ll approve you for a loan that covers the cost of your groceries. Not very efficient, right?
Get preapproved for a mortgage before you start house shopping. Trust us, you’re not putting the cart before the horse. You’ll have a better sense of your budget and you won’t have to sweat out the application process after you’ve found the home of your dreams. Plus, in a competitive housing market, a preapproval letter is a must-have to submit an offer.
Not exploring your home loan options
This might sound strange coming from a credit union, but explore your options when it comes to finding a mortgage lender. In fact, a good credit union invites comparisons, because if they’re not offering you the deal that you’re most comfortable with, then they don’t deserve your business. You have to choose the home loan that’s in your best interest, and that means comparing the interest rates, fees, and loan terms from at least a handful of lenders.
Take the time to find the mortgage that is right for you.
Making assumptions about a down payment
You’ve probably heard that a 20% down payment is the standard for a mortgage. It’s possible that even hearing that — and accepting it as fact — has led you to shy away from buying a house. In reality, the average down payment in the United States is about 6%.
It’s true that a bigger down payment means a smaller mortgage, and a down payment of at least 20% eliminates the requirement for private mortgage insurance (PMI). But you have to decide for yourself what size down payment you can afford to make. There are even federal loan programs that you can look into which allow borrowers to put down as little as 3.5%.
Failing to stick to your home budget
Everyone has a budget until they walk through the front door of the expensive home that is everything they’ve ever wanted. It’s then that the wheels in your head start turning, convincing yourself that the price isn’t too far above your budget. But eliminating the breathing room in your budget for a house you can’t afford can often create even more financial stress, especially when you start adding other bills and expenses on top of your mortgage.
Stick as close to your budget as possible. You’ll thank us later.
Sacrificing too much of your savings
You’ve worked hard to build up your savings. It’d be a shame to wipe it out in one fell swoop. Sure, you may have started saving to be able to afford a house one day, but that doesn’t mean you have to spend it all with one big purchase — dream home or not.
What happens if you have to make a major repair soon after you’ve moved into your new home? Consider some of the extra costs of buying a house, like moving costs, repairs, utilities, and all of the small things that add up. Much like with your budget, breathing room is important.
Now that you know what not to do, you know what to do now: Get in touch with us! We can help take you from first-time home shopper to first-time home buyer.