Buying a house for the first time is an exciting process that will introduce you to the joys and challenges of homeownership. Because of the large number of financial and legal factors that figure into any home sale, it's not uncommon for first-time homebuyers to be overwhelmed by all the details involved—and, sometimes, they make mistakes. Below is an overview of a few of the more prevalent first-time homebuyer mistakes to help you avoid these missteps and their consequences.
How to Evade First-Time Homebuyer Blunders
1. Searching Before Mortgage Preapproval
To start a home search on the right foot, you must first know how much you can realistically afford. The only dependable way of determining this is to first apply for and obtain preapproval for a mortgage. The lender will preapprove you for a certain amount, and you can then look for homes that fall within that price range. Also, in markets where competition is tight, applying for a mortgage after finding the right home could waste valuable time, allowing another party to make an offer.
2. Overspending on a Down Payment
Most homebuyers put down a down payment that is 10% to 20% of the selling price. For most people, this is a substantial amount of money that takes years to save. But spending everything on a down payment is going to leave little or no money for the other costs related to the sale.
These costs include taxes, fees, commissions, insurance, moving, and upgrades to the property, not to mention living expenses. Closing costs alone are 3% to 5% of the selling price. Only buy when you have your desired down payment saved in addition to several months' worth of living expenses and a moving, renovation, and furnishings budget.
3. Rushing the Process
Homebuying is complex and requires time. Map out your plans at least a year in advance, so you will have ample opportunity to prepare and save. This strategy will also give you time to improve your credit for the mortgage application. Contact several local realtors to get an idea of the homes currently available and adjust expectations accordingly. Set up a savings account specifically for homebuying expenses. With a little planning, you can purchase your first home confidently.
When you need a home loan, trust mortgage lender professional Dan Main. He has more than two decades of experience serving first-time homebuyers throughout the St. Charles County, MO, region. Dan offers customized services to help you find the most beneficial mortgage programs for your situation and budget. Call (636) 284-4144 or visit his website to schedule a consultation.
Dan Main: NMLS # 502036
Flat Branch Home Loans: NMLS # 224149
201 Salt Lick Rd
St. Peters, MO
This is for informational purposes only and not an offer to lend or extend credit.