First-time home buyers are definitely prone to making mistakes, after all - this is all new to them. Here are some common mistakes that first time home buyers make. If you’re a first time buyer, maybe this list will give you something to consider - and ways to avoid making these errors.
Mistake #1 Not knowing how much house you can afford
Without knowing how much you can afford, you will most likely waste a lot of time. You may end up looking at houses that you just cannot afford, or even viewing houses that are lower than your price point.
To avoid this mistake, try using a mortgage calculator to help you know what price is affordable. You can contact me to help you with this - or reach out to a good lender who can get you pre qualified / pre approved for a mortgage.
Mistake #2 Shopping for a house before a mortgage
I think we can all agree that its more fun to look at homes than it is to talk with a lender. However, that’s exactly what a lot of first-time home buyers do: They start their home search before finding out how much they can borrow. Then the disappointment sets in when they discover they were looking in the wrong price range.
Mistake #3 Only getting one rate quote
When you shop for a mortgage, you should think about it like other expensive item that you plan to purchase: It pays to compare offers. Mortgage interest rates vary from lender to lender, and so do fees, so do your homework!
Mistake #4 Not checking your credit report
All mortgage lenders will examine your credit report when deciding whether to approve your loan. If your credit report has errors, you may get a quote on an interest rate that is higher than it should be. That’s why it pays to make sure your credit report is accurate.
Mistake #5 Making a down payment that’s too small
Nowadays, you don’t need to have a 20% down payment to buy a home. Some loan programs enable you to buy a home with as low as 3% down, or in some cases, even 0%. In recent survey by NerdWallet, one in nine (11%) homeowners under age 35 agreed that they should have waited until they had a bigger down payment. It was one of the most common regrets that millennial homeowners had.
Mistake #6 Not considering first-time home buyer programs
As a first-time home buyer, you may not have a lot money saved up for the down payment and closing costs. But don’t make the mistake of assuming that you have to put off homeownership while saving for a big down payment. There are several low-down-payment loan programs out there, including state programs that offer down payment assistance and competitive mortgage rates for first-time home buyers.
Mistake #7 Applying for credit before the sale is final
The period between your loan approval and the closing is critical: You should leave your credit alone as much as possible. It’s a mistake to get a new credit card, buy furniture or appliances on credit, or take out an auto loan before the mortgage closes.
Mistake #8 Underestimating the costs of homeownership
After you buy a home, your monthly bills are still going to add up. This can come as a surprise if you’re not ready for it.