5 Mistakes First Time Home-Buyers Make
Most people dream of buying a home and know exactly what they are looking for and what they would like to spend on the mortgage. However, they may not consider several important details.
If you aren’t familiar with the complexities of purchasing a home, you may have future financial regrets. Here are the top five mistakes that first-time homebuyers often make.
They don’t take into account all of their options. Although purchasing a home is often the best financial decision you could make, it doesn’t work for everyone. For example, if you know you’ll only be in the home for a couple of years, it may not make sense to buy after you amortize the closing and moving costs.
They don’t consider costs other than down payment. Homeowner’s insurance, maintenance and repairs, HOA (Homeowners Association) fees and closing costs may eat up your savings and leave you with no emergency fund.
They don’t get proper home inspections. Skimping on home inspections is no way to cut costs when buying a home. The defects a home inspector may find far outweigh the price of a home inspector and you may save several thousands of dollars on future repairs.
They expect their home to always appreciate. Many home buyers think if they pour their life savings into a home and keep it for a few years they’ll get a significant increase in the value of their property. While home equity is nice and home ownership is historically a very good investment, the market does vary and you may not have access to immediate liquid assets if you need money fast.
They don’t consider debt-to-income ratio . A lender considers this ratio when looking at your ability to pay for a home. If you’ve accrued too much debt, you may not be approved for a mortgage loan. Show a history of saving – not getting into debt before you apply for a home mortgage. (Also, keep a close eye on your credit score before applying with a lender. Even if you have a pre-approval letter, you’re not guaranteed for the loan. If your score changes a great deal, you may find out just before closing time that you no longer qualify.)
If you’re a first-time or novice home buyer, it’s imperative you spend some time with an expert, such as a trusted Realtor®, before rushing into the home-buying experience. Today, many home buyers rely on websites and may get a false sense of the true values of homes in the area. A great agent can give you a reality check on home prices, and they keep up with changes in current market values.
