Like any journey, the road to home ownership can be exhilarating but potentially filled with potholes that may be difficult to see for first time buyers. First time home buyer mistakes are common, and while many aren’t a huge deal, some can lead to unwanted process delays and financial issues. Here are 5 common first time home buyer mistakes and how to avoid them.
Looking At Homes Before Pre-Approval
Buying a house is potentially the most exciting (and largest) purchase you’ll make, so it’s understandable why you’d want to get a head start on shopping. But shopping for a home without a pre-approval letter can be a big mistake. If you fall in love with a home that you’re sure is in your price range, only to find out after that you don’t qualify for a loan of that amount – it can lead to heartbreak and delay your home buying journey. Taking the time to apply for approval upfront is beneficial to home buyers because it gives both the home buyer and the real estate agent an accurate budget to work with. Getting the pre-approval before submitting an offer helps smooth out the journey once you’re under contract since the lender previously verified your income, assets, and credit.
Not Checking Your Credit Report
Your credit score is a large part of buying a home, so keeping that in mind during the entire home buying journey can be beneficial. Although your credit is pulled during the lender’s initial approval, lenders will recheck it just before the scheduled closing day, and changes to your score can affect the interest rate of your loan and the debt-to-income ratio. Asking your lender before opening new lines of credit is always advised as new lines of credit can push you to an ineligible status if you were previously on the edge. To learn more about what makes up your credit score, visit here.
Not Budgeting For Additional Expenses After Move in
The expenses don’t stop once you receive the keys to your new home. Leave some wiggle room in your budget to help offset some of the unexpected costs of moving. These expenses can include house cleaning, painting, utilities, lawn care, and groceries. You can save some money by putting in some sweat equity, but also be realistic about what you can tackle and what should be left to the pros.
Not Researching The Neighborhood
Forgetting to research your new home’s neighborhood can result in some unwanted surprises down the road. If the neighborhood, school district or other environmental factors are less than ideal, it can be difficult to enjoy your new home to the fullest. It’s always a good idea to tour your home and drive around the neighborhood in both the daytime and nighttime to see the atmosphere. You can also research the school district beforehand to see if it meets your standards.
Making Emotional Decisions
When you walk through what you’ve coined as your dream home, it can be easy to get caught up in the excitement. Around every corner is a new memory to be made, and you can already envision pushing your kids on the imaginary swing set in the new backyard. But, while buying a home is certainly an emotional milestone, it’s also a large financial one. Make sure the monthly payments align with what you’re comfortable with so that after the allure of your new home slightly fades, you’re not left with a huge monthly payment that makes you uncomfortable.
The bottom line is that buying a home can be both exciting and stressful. With so many steps involved, it’s easy to get lost. If you’ve had friends or family who’ve recently gone through the home buying process, ask them what they’ve learned along the way, and make sure to contact your real estate agent and lender with any questions you may have.