There are many mistakes that mostly first time homebuyers make. These mistakes can be avoided if you know what their impact will be in the process. Moreover, it will help you ensure they are not repeated again any other time. Learning them is as important as knowing how to tackle them and prevent a repeat. Study the mistakes carefully and learn how they will affect you either directly or indirectly.
1. Trying to make a fix of credit score
This will do you more harm that any good if you do not consult with your financial adviser or an expert first. Even if you pay down your credit card balances, you may still find yourself short of the desired amount to buy the home. As much as this is a good thing to do as it will impact on the credit score to debt ratio it can leave you with financial problem and being unable to meet the purchase requirements of the home.
2. Inability to consider your future in the purchase
One of the things that you have to do is make sure you have considered your future. What do you want to do with the home or what do you want from the home. Consider it from the future like 10 years from now. Are you intending to have a bigger family or not? If the answer is yes, then it means you will need a bigger home and in a different location. More importantly, ask yourself the duration you plan on staying around. This will help you know the mortgage type that will make sense to you.
3. Not doing good researching on financing
The homes comes first followed by financing perspective is no longer relevant in the current market. You have to get pre-qualified for the mortgage first before you embark on shopping for a home. This will let you know what kind of home you can afford. Shop for the rates and fees. Make evaluation of the credit and decide on your preference and the down payment comfortable with you. Shop for a good lender in advance before you start looking for the home to buy.
4. Assumptions on good faith estimates
Know that the provided form from the lender indicating estimate-closing costs is not actually set in stone. The closing cost can be more so you have to be prepared. It is usually 3-5% of loan amount. The best thing to do is to shop around and draw comparisons of the good faith estimate given by the lenders. In case there is any disparity, you can seek explanation from the lender and determine if you still want to push through.
5. Not budgeting for home expenses
It is not just buying a home that is your major problem as a new homeowner. There are other costs or expenses too like maintenance costs you should worry about too. Budget for increase in utility bills and future maintenance costs as well as those of repairs like roof repair or even furnace repairs.