Being confined inside over the past year made many consider the question, “Is it time to commit to buying a home for the first time?” If you, like many others, are still left with these lingering thoughts, you likely have a loose idea of what you’re looking for as a fist-time homebuyer. But all the excitement can make it easy for first-time homebuyers to get ahead of themselves. Be careful to avoid the six mistakes below when purchasing your first home!
1. Not setting a budget: The first step in your homebuying journey should be to determine your budget. Without knowing how much you can afford, you risk wasting yours and others’ time. For first-time buyers, your goal should be to buy a house and get a bank loan with a comfortable monthly payment comparable to your current housing expenses.
To avoid this mistake, use a mortgage affordability calculator to help you calculate an appropriate budget.
2. Not preparing for the mortgage process: To determine whether you qualify for a mortgage – and what your rate will be – your lender will evaluate your credit and your debt-to-income ratio, to determine your eligibility. Prior to applying, work to improve your credit score and debt-to-income ratio before you try to borrow.
To avoid this mistake and help you get the best terms on a loan, make sure you’re prepared – have all of your documentation, like tax returns, pay stubs, and financial statements, on hand.
3. Making a down payment that’s too small: The smaller your down payment, the longer you will be paying off your mortgage. A bigger down payment gets you a smaller mortgage, giving you more affordable house payments.
To avoid this mistake, work with a financial advisor or your lender to determine whether you have enough set aside to purchase a home at this time. It might be worth waiting – and saving – to get the home of your dreams down the line.
4. Emptying your savings: Buying a home will always be an expensive purchase, but it will never be worth emptying your savings. You shouldn’t be putting yourself or others into financial distress to purchase your first home.
To avoid this mistake, follow the above tip and ensure that you are in good financial standing to purchase a home for the first time.
5. Not looking for first-time home buyer programs: Though buying a home for the first time can be daunting, there are plenty of low-down-payment loan programs out there. For instance, a handful of states have programs that offer down payment assistance and competitive mortgage rates for first time homebuyers.
To avoid this mistake, do your homework! Work with your lender to determine if you qualify for first-time home buyer options near you. Check out this list of eight first-time home buyer loans and programs to find out if any of them are right for you.
6. Not considering repair and renovation costs: Considering buying a fixer-upper? Or settled on a home in need of renovation? Be sure to account for these things before submitting your offer. First time home buyers frequently underestimate final repair and renovation costs.
To avoid this mistake, seek more than more estimate for repairs and renovations. A good real estate agent should be able to refer you to contractors who can provide estimates.
The most successful first-time homebuyers are the most prepared. Make sure you’ve done your homework prior to your search, ensuring you’re in the best position to commit to home ownership for the first time.
Have questions about buying a home for the first time? Don’t hesitate to contacts us at Mariott Real Estate today!