Mistakes are unavoidable when you are buying a home. It is even more so if you are a first-time home buyer. Today, let us take a look at the most common blunders first-timers commit so you can avoid them.
Mistake #1: Not figuring out how much you can afford.
The price range is one of the most important things you need to determine before you buy a home. And to set a price range, you should know how much home you can afford.
Unfortunately, not all first-time home buyers assess their finances. They end up wasting time, looking at homes they can’t afford. Others take the plunge and struggle to make the monthly payments. Worst case scenario is the home gets foreclosed.
Avoid this mistake by: Taking time to go through your finances. How’s your credit score? Do you need to improve it? What about your debt-to-income ratio? What are your loan options, and which ones can finance your dream home?
Mistake #2: Not making a bigger down payment.
Fact: Although it is typical to make a 20 percent down payment, you do not always need to. Some mortgage loans allow you to make smaller down payments. And there are sellers out there who are happy to take it.
That said, it does not always work out. According to this NerdWallet survey, 11 percent of Millennial homeowners regret this move.
Avoid this mistake by: Well, it depends. There are pros and cons to making smaller and bigger down payments. The former allows you to make an offer sooner in the expense of taking out a bigger loan. Meanwhile, the latter enables you to get a smaller mortgage, but saving can lead to hikes in home prices and interest rates.
Remember Mistake #1? The safest option would be to set a price range. Then, make sure to have enough funds set aside for a reasonable down payment.
Mistake #3: Emptying your bank account to buy a home.
Using up all your savings to buy a home is a big no-no. First, upfront costs are not the only things you need to pay. You also need to take care of closing expenses, commissions, and other services you availed. Second, you need to shoulder maintenance and repairs, especially if you are buying a resale. Last but not the least, you have monthly amortization to pay.
Avoid this mistake by: Making sure you have enough funds for upfront, closing, and maintenance costs. If you cannot afford all these, it may be wiser to wait or rent a home for the mean time.
Mistake #4: Ignoring first-time home buyer programs.
There is no shame in exploring first-time home buyer programs. They exist for a reason. And that is to help first-timers like you complete successful transactions.
Need options to help you make a bigger down payment? Looking for competitive mortgage rates? Chances are there is a program out there that caters to your needs.
Avoid this mistake by: Talking to different lenders and getting more than one rate quote. Most of all, explore the myriad mortgage loans and buyer programs out in the market.
You do not need to worry about mistakes with Formula Realty
Our team will handle your home buying needs and goals with utmost care. That way, you can make informed decisions and avoid all those blunders. At the end of the finish line is your dream home in New Jersey.
Work with us today! Contact our team at 732.858.5882 or contact(at)formularealty(dotted)com.