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Biggest mistakes first time home buyers make

June 27, 2022
By: Luke McCallion

Smiling female real estate agent giving keys to new house to excited millennial couple of buyers starting living together after successfully signing purchase contract. Concept of new beginning

The process of purchasing your first home may be both thrilling and stressful. You need to not only select the ideal location, but also the ideal mortgage. Finding an inexpensive home can be difficult due to low inventory in many local markets and rising housing prices.

Even though you might feel under pressure to buy a home right immediately, your finance needs to be in place before you see properties and make bids. To do that, you must ensure that your debt-to-income ratio, credit history, credit score, and the general financial picture will persuade a lender that you are creditworthy enough to borrow money.

In the mortgage and home-buying procedures, many first-time buyers frequently make several mistakes. Here are a few of the most typical errors to avoid.

Overlooking the Budget

You must be aware of the cost of a home before you begin your search. Calculating your home’s purchase price as well as the cost of owning is the most effective approach to do this.

As first-time purchasers, it’s crucial to keep in mind that your mortgage payment will be determined by three factors, which are as follows:

  • Your borrowing capacity (your loan-to-value ratio and overall income ratio)Your
  • mortgage’s interest rate
  • The duration of time your payments are spread out across (the amortization period)

Skimping on the Down Payment

First-time homebuyers should organize their finances before making an offer on a home. One of the first-time homebuyers’ worst mistakes is not saving enough money for a down payment.

This is because purchasing a home involves two significant costs: the purchase price and closing costs.

Forgetting About Closing Costs

While it is possible to purchase a property without paying any closing costs, it is more typical for them to range from 2 to 5 percent of the purchase price. When you sign all the paperwork to complete your purchase and transfer ownership from the seller to the buyer, which is known as closing, closing expenses are often paid.

Not Getting Pre-approved for a Loan

One of the best things you can do as a first-time home buyer is to get preapproved for a loan. It’s a great approach to be sure your choice will be financially sound and within your spending limit. Knowing what kind of mortgage is accessible for purchasing the home you want also enables you to search around the market with confidence.

Improperly Planning for Home Maintenance

One of the most crucial and frequently disregarded components of planning to purchase a home is properly planning for home maintenance. Maintaining your home involves taking care of your money as well as the physical structure.

Home maintenance entails more than simply keeping up with minor home repairs; it also calls for you to mentally and physically get ready for life after moving into your new home.

Not Hiring an Attorney for the Closing

While purchasing a home can be thrilling, it can also be challenging and complicated. When you’re prepared to begin your first house search, it’s critical to understand what you’re getting into. There are many things that, although they may appear to be straightforward at first, turn out to be considerably more difficult than anticipated. 

Spending Too Much or Too Little on a Home That Isn’t Right for Your Needs and Budget

It might be simple to get carried away with the joy of finally having your own house when you first become a homeowner. However, if you’re not careful, this excitement may push you to overpay for or underpay for a home that doesn’t meet your needs, which would eventually cost you a lot in the long run.

Millennials are particularly prone to making this error because they may have never owned a home before and don’t know how much money they’ll need for upkeep costs like repairs and gardening.

Wrapping up! Because first-time buyers have so much to learn, it’s simple to make some of these errors even if you’ve bought a home previously. I wish you luck in avoiding the frequent blunders that could harm your attempt to purchase a home.

Before starting, make sure to do some research on the home-buying process. Make sure to look into the first-time home buyer programs that are offered in your state or province.

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“I was very skeptical when I was searching for a home buyer in the are but once I talked to one of the home investors at Philly Housing Sale, I felt certain that I would be treated with great customer service but was still unsure if I would be given a fair offer for my home. After I agreed to having them value my home I got an offer that I couldn’t resist! They are truly professionals and did everything they said they would.” – Lauren, Fishtown

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