When you finally decide you are ready to take the leap to become a first-time homebuyer you may be experiencing a mix of emotions. You could be both excited and nervous. In the big swirl of heady emotions, many homebuyers get lost in the mix and forget the vital steps they need to take to do the process properly. Because of these mistakes, they lose money saving opportunities and helpful assistance that could have greatly benefited from.
But luckily for you, you are still starting your home buying journey. With a fair heads up, you can avoid the mistakes that other home buyers have made and end up in a far better situation.
Not Comparison Shopping for Rates
If you were shopping for a car, would you head to the nearest dealership, point to the nicest looking car, and ask to buy it? No! You would first check out the cost, mileage, safety features, and a slew of other important details.
So, when you are looking for a mortgage in order to buy a home, you need to put some serious effort into comparing offers. Make note of the interest rates, closing costs, and possible discounts. According to NerdWallet, you could save $430 in interest just by comparing five different lenders.
Not Carefully Checking Credit Reports
Your credit report is a vital part of the mortgage approval process, so you need to make sure everything is in order and accurate. Go through your recent data that pertains to credit cards, student loans, car title loans, or other personal loans to make sure that it is all up to date.
Look carefully for errors as they could damage your chances of approval for a mortgage. Also, if you have a head start, do what you can to improve your credit score ahead of time before you actually apply for a mortgage.
Making a Small Down Payment
You don’t need to make a huge down payment to buy a home smartly. There are a lot of programs that make it possible for buyers to put 0% to 4% down on a home, however, this decision may come back to haunt you later. As the saying goes, “Better safe than sorry.”
The idea of saving more for a larger down payment is always worth considering. The smaller the mortgage, the more affordable your monthly payments will be.
Underestimating Other Costs
Many first-time home buyers make the mistake of assuming the main costs that come with home ownership include just the mortgage and utilities. First time home buyers might think that home ownership is similar to renting.
However, when you acquire a mortgage and actually buy a home, you are committing yourself to a lot more expenses than just the mortgage and utilities. You will have to deal with homeowner association fees, property taxes, insurance costs, increased utilities, plus any repair and/or maintenance costs that your landlord used to cover.
Don’t allow these common mistakes to deter you from making that exciting dream purchase! Instead, use these mistakes as a guide on what not to do so you can be the best first-time homeowner you can be.