It can be exciting, challenging, and a little bit scary to find a home that you love at an affordable price. You will soon learn how overwhelming it can be and how many variables you need to remember, if you are looking for a home for the first time. Sadly, several first-time homebuyers commit costly errors. You have to remain aware about these common homebuyer errors to avoid making the same errors. view publisher site
Non-determination on what you can afford
You have to realise that because the bank may have a different opinion, you should not necessarily determine what you can afford according to the sum you are happy with paying. Create a list of all your monthly expenses but exclude rent if you have not yet set your budget; this covers your recurring monthly payments and significant expenses that occur only once a year. Get the actual cost and deduct it from your take-home pay. You would know the price you will pay per month for your home by doing so. You will end up shopping for homes that are beyond your reach if you fail to do this and ultimately fall in love with a house that is out of your price range.
Shopping first for a house and applying later for a loan
As a first-time homebuyer, you have to realise that it doesn’t begin with home shopping to buy a house. If you have enough money to pay cash for your house, it must start with getting pre-qualified for a loan. The bank might not be willing to lend you the amount of money that you think you can afford, especially if you have a low credit rating, or if your income is unstable. For this reason, before you begin shopping for a home, you have to get pre-approved for a loan first. If you struggle to do so you’re just going to waste your time. Remember the simple house hunting rule: first get pre-approved, and then find a home.
Didn’t know extra costs other than mortgage payments
When they believe they can afford a mortgage, several first-time homebuyers decide to buy a house. There are other costs, however, that you and other homebuyers need to remember. You would have to pay for home insurance, property taxes, house maintenance and repairs, association dues for homeowners, for example, and so on. Just because a mortgage can be afforded doesn’t mean you’re ready to buy a home. Don’t forget to consider these extra costs, as if you don’t pay for them the bills will pile up.
Spend all your Down Payment Savings
There are a lot of first-time homebuyers who spend all or most of their savings on down payment. This is a vital error that homebuyers make because they have no money at all left. If you’ve been shopping for a home, you know by now that you won’t have to pay for mortgage insurance if you pay down 20 percent. Usually, this is a smart idea since it will help you save on monthly mortgage payments. However the prospect of living without any savings isn’t worth it.