Financial Mistakes First-Time Home Buyers Make
Tuesday Sep 08th, 2020Share
Buying a home for the first time is one of the most important and exciting purchases you'll make in your life. It's a significant life achievement that many of us spend years planning for and working towards.
When you've saved up a substantial down payment and found the perfect spot – the feel is great.Whether it's a two-bedroom apartment with a balcony on a quiet side street, or a charming, single-family home in the suburbs – the temptation to simply grab the keys, sign off and start shopping Etsy for a new home decor is immense.
Yet the last thing you want is to be impulsive and then live with guilt. So, make sure you don't make any financial mistake when buying your dream home. Here are the most common mistakes that first-time buyers make. Let's have a look so you can avoid making them.
Going with the First Lender
For first, it may seem an arduous job to take out a mortgage, there's no need to rush it. To find the best deal that fits your circumstances, it is necessary to shop around. Buyers always stick to their own bank or the first lender they are talking to, even though they may consider a much better deal elsewhere.
Forgetting About Closing Fees
Buying a house isn't like any other dealings. In addition to mortgage payments and down payment, there are a variety of factors you need to factor in. Forgetting to add these up, and therefore budgeting for them will leave you struggling to keep up with payments after moving in. Take time to consider these costs like home inspection, taxes, legal fees, moving costs, insurance, repairs, utilities, and many more.
Not Knowing Your Options
There are many options to purchase a house, but most buyers do not consider them. These schemes could significantly ease the financial burden. It is worth checking out first-time borrower programs, they are usually different from place to place; as well as the various forms of loans, many of which target those that may not qualify for a traditional mortgage.
Not Getting a Mortgage Pre-approval
Its important to know if you can get a mortgage approval.The rejections are hard to bear. You can potentially prevent this all-too-common dilemma by making sure you're pre-approved for a mortgage. Upon going at your credit report, income, tax history, and other financial information, a lender must pre-approve your loan.
Emptying Your Saving Accounts
Going all-in when you buy a house is a major no-no, but it's something many first-time homebuyers are willing to do to get a foot on the ladder. Nonetheless, in case of unforeseen costs such as emergency repairs.You must keep some cash aside. When you don't have a secure buffer, you may find yourself struggling to keep up with payments and may be pressured to do so.
Getting the Down Payment Wrong
Many buyers are persuaded that they will have to put down a decent 20 percent down payment and put off buying a home before this princely amount has been saved. That can take years and affect your quality of life along the way, and it's completely unnecessary.Although putting down 20 percent will prevent you from paying mortgage insurance, you are by no way obligated to spend too much, and with certain forms of mortgages, you can put down as little as 3.5 percent, or even 0 percent.
On the other hand, it is probably best to stop putting too little down on the down payment if you can afford to. Small down payment will result in more costly loan repayments, which considerably decreases your monthly budget. This all comes down to finding the right balance.
Getting a New Job
Moving on from the previous chapter, try not to change your job when buying a home. Lenders usually need 2-year evidence of stable profits, and on that basis will pre-approve your loan. In the meantime, changing your work will invalidate their previous bid. When you think you're going to need to switch jobs, let your lender believe from the get-go.
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