5 Big Mistakes to Avoid When Buying Your First House
Buying a home is a big investment, so you want to approach the endeavor wisely. Here are five of the top tips for first-time home buyers. Don't make these mistakes! If you're in search of real estate in the Topsail, North Carolina area, let Century 21 Action help. We have the local expertise and knowledgable agents to help you navigate the coastal real estate market. Contact us and let's get started!
1. Not getting pre-qualified for a mortgage.
It’s more fun to look at homes than it is to talk about your finances with a lender. So that’s what a lot of first-time home buyers do: They visit properties before finding out how much they are able to borrow. Then they are disappointed when they discover they were looking in the wrong price range (either too high or too low) or when they find the right home, but aren’t able to make a serious offer.
How do you avoid this mistake? Talk to a mortgage professional about getting pre-qualified or even pre-approved for a home loan before you start to seriously shop for a place. The pre-qualification or pre-approval process involves a review of your income and expenses, and it can make your bid more competitive because you’ll be able to show sellers that you can back up your offer.
2. Overlooking first-time homebuyer programs and loan assistance.
As a first-time home buyer, you probably don’t have a ton of money saved up for the down payment and closing costs. But don’t make the error of assuming that you have to delay homeownership while saving for a huge down payment. There are plenty of low-down-payment loan programs out there, including state programs that offer down payment assistance and competitive mortgage rates for first-time home buyers.
How do you avoid this mistake? Ask a mortgage lender about your first-time home buyer options and look for programs in your state. You might qualify for a U.S. Department of Agriculture loan or one guaranteed by the Department of Veterans Affairs that doesn’t require a down payment. Federal Housing Administration loans have a minimum down payment of 3.5%, and some conventional loan programs allow down payments as low as 3%.
3. Putting all of your savings into a down payment.
If you buy a previously owned home, it almost inevitably will need an unexpected repair not long after. Maybe you’ll need to replace a water heater or pay a homeowner’s insurance deductible after bad weather. “That’s a growing pain for the first-time homeowner, when stuff breaks,” says John Pataky, executive vice president of the consumer division of EverBank. “They find themselves in a hole quickly” if they don’t have enough saved for emergencies.
How do you avoid this mistake? Save enough money to make a down payment, pay for closing costs and moving expenses, and take care of repairs that may come up. Lenders will give you estimates of closing costs, and you can call around to get estimates of moving expenses.
4. Neglecting your credit report.
Mortgage lenders will scrutinize your credit reports when deciding whether to approve a loan and at what interest rate. If your credit report contains errors, you might get quoted an interest rate that’s higher than you deserve. That’s why it pays to make sure your credit report is accurate.
How do you avoid this mistake? You may request a free credit report each year from each of the three main credit bureaus. You may dispute any errors you find.
5. Not using the right real estate agent.
Don't go it alone! Employ the assistance of experts in the field to help guide you along the way. You want to choose a real estate agent that has a good reputation, solid experience, local knowledge of the real estate market, and the skill set necessary to provide the best home-buying experience possible. A good real estate agent is priceless!
You can read more about these and other homebuying tips in this article from NerdWallet. Also check out the video below for more expert advice.