3 Things First Time Home Buyers Should Avoid
Mistake #1 - Thinking it is too soon to get pre-qualified
So, you’ve been considering buying a home and your plan was to do a little driving around to look at houses? This little mistake happens all too often. What begins as an innocent little window shopping inevitably becomes a love at first sight situation where you just have to have a certain home and end up needing to make an offer for fear of losing the property to another buyer. If you arent already prequalified with a lender, it is possible you could lose out on that house entirely. Due to either low inventory and high competition, or a hot market and plenty of eager buyers, the house you want may not sit for long. Talking to a lender beforehand can help you in getting a better understanding of your maximum budget and where you stand exactly in terms of buying power. Even if your initial intentions were just to do a little casual shopping, it is always better to be safe and proactive rather than reactive and a tic too late.
Mistake #2 - Waiting till the last second to check their credit
In the same way casually looking at homes and not getting prequalifed first can actually be a hinderance, so can getting your credit check shortly before applying for a home loan. The truth is, if you are like most Americans, you more than likely have no idea what to expect when it comes to your credit score. For instance, it is very possible that there could be errors on your report that you’re unaware of or even a misunderstanding from years past with a creditor that you hadn’t even realize had been reported to a credit agency.Even if your payment history has been impecible and you feel you’ve done an outstanding job at managing your debt, these often overlooked things can still turn up to bite you in the rear. Whether accurate or not, these small errors could not only lower your score, they could keep you from qualifying for a mortgage entirely. Checking your credit early on in the process gives you ample time to attempt to correct any potential errors and help improve your score. Removing these blemishes can help position you for a better rate and a more affordable loan in the future.
Mistake #3 - Forgetting about closing costs
When preparing to buy their first home, the majority of people tend to focus primarily on the down payment and entirely look passed the fact that there is another very important expense related to the purchase which is the closing costs. Closing costs are comprised of a wide array of fees such as escrow and appraisal fees, application fees, recording fees, pest inspections etc. You can expect to pay between 2 and 5 percent of your purchase price in closing fees which if you are not prepared for it beforehand can definitley catch you off guard. It is a very common occurrence among many first time home buyers to forget to factor in closing costs when getting ready to buy a home, and that can be a very costly mistake to have to deal with at the last second while signing by the dotted line.
Bonus Mistake #4. Thinking they should go at it alone
Can you begin the home buying process without the expertise of a lender? Absolutely. But that doesn’t mean it is a good idea? With today’s ease of accessibilty to an endless array of information, one can technically Google “how to replace a transmission” and begin taking on that task on their own without the assistance of a trained mechanic, but again, that may not be the smartest choice. Regardless of what type of home you are purchasing, it is always wise to seek consultation from an expert in the field. Never be afraid to ask questions. Having the advice of an experienced and knowledgeable person in mortgage finance to help guide you can potentially save you a whole lot of headache.