Buying a house for the first time can be both exciting and overwhelming. There is a certain beauty behind owning something that requires a hefty investment. Then again, the home-buying process involves many steps, some of which can be quite tedious. That said, the tendency for first-time home buyers to make potentially costly mistakes can be quite high, especially if done solo.
Here are some of the most common mistakes that first-time buyers make, as well as tips on how to avoid them:
Mistake: Not getting pre-approved for a loan
Pre-approval for a mortgage lets you know the amount of money that you can borrow from a lender, allowing you to stay on budget when looking at properties.
Moreover, getting pre-approved for a mortgage also gives you a leg up over the competition when it comes to making an offer on a house you want to buy. This shows sellers that you are serious about purchasing the property.
Not getting a pre-approval opens you to the risk of going over your budget. Moreover, you could lose your leverage when making an offer for a house begins
Solution: Find a lender or bank who can give you a fully underwritten mortgage or loan pre-approval before you start your search for a home.
Mistake: Not checking credit reports
Banks and lenders will scrutinize your credit reports and other important financial documents to see if you qualify for certain loans and interest rates.
Your credit report should summarize the calculations and circumstances that qualified you for a mortgage. If there are errors here that go unchecked, these could impact your chances for loan approval or result in rates and terms that are higher than you deserve.
Solution: You can get a free credit report on a yearly basis from any of the three national credit bureaus – Equifax, Experian, or TransUnion. Should there be errors in the report they generate, you won’t have any problem raising these to them for reevaluation.
Not looking into first-time home buyer assistance programs
Given the steep prices of properties these days, many first-time buyers opt to delay their purchase in the hope that market trends would turn in their favor at some future time. But with the real estate market in constant flux plus the looming rise in interest rates by the Feds, putting off home-buying plans might end up to not being able to buy a home at all.
Solution: Instead of delaying your search for a home, take advantage of the government’s loan and housing programs such as those from the Department of Housing And Urban Development, the Federal Housing Administration, the U.S. Department of Veterans Affairs, and the U.S. Department of Agriculture. These housing loans have relaxed eligibility requirements and offer relatively low costs.
Not working with a qualified real estate agent
One of the biggest mistakes that first-time home buyers can make is to treat the home-buying process as a DIY project with the intention to save on commission fees.
While getting an agent to help you in getting your first home is purely optional, the expertise, knowledge, and experience they bring to the table will prove to be invaluable to you to ensure the highest chances of getting the home you deserve under the best terms possible.
Solution: Take the time to screen real estate agents before starting your home search. Make sure to get one who knows the local real estate market well, has years of experience in the industry, and will always have your best interests in mind.
