The last thing we want is to have regrets after buying such a large purchase, a home. If you’re like a lot of consumers these days, you’ve done your research, you’ve become educated, and you understand a little bit more about the home buying process. But yet, if you’ve never been through the process there are still things that you might not quite understand and therefore, could regrets. Here are some of the Top Mistakes Many First Time Buyers Make and don’t realize it until after they’ve moved in.
#1. They’ve bought a house they really can’t afford.
As a lender, it is my job to help you get preapproved for a home loan but I also give you the highest possible amount you will be approved for. For instance, if you make $200,000 a year, you might be approved for up to $600,000 in a home loan, however, that’s the high-end of the scale, it doesn’t necessarily mean you have to spend that much on a house. Try not to max out your budget. If you are approved for $600,000, consider finding your first home more in the $450,000 range. This will leave you plenty of room each month for upgrades, repairs, replacements, or just plain fun money.
#2. Shopping for a home before getting preapproved.
One of the biggest issues is that people find a home they think they love only to discover they can’t afford it. Try to give yourself some discipline and not look at any homes until you know how much you can afford.
#3. Putting off buying the home you love because of a down payment issue.
Perhaps you have found the home of your dreams and you just love it but that large down payment is making it almost impossible for you to buy now. Don’t let that discourage you. Most people don’t put 20% down and there are a lot of other programs nowadays to help people find a home, buy the home, and offer assistance with the down payment. Call me today to find out all of your different options available for a low or even zero down home loan.
#4. Not understanding your options with FHA, VA, and USDA home loans.
There are a lot of different programs nowadays and most of them have nothing to do with predatory lending that we saw just 10 to 12 years ago. Yes, homebuyers can still get a conventional loan with a 20% down payment or even a 10% down payment but there are a lot of options such as an FHA which allows a low down payment of just 3.5% and lower credit scores. If you or your spouse or anyone living in the household has been in the military, you may qualify for a VA loan, which is a zero-down home loan and the seller pays closing costs. Also, USDA home loans are great for those homes designated in rural areas that require no down payment.
#5. Not understanding your own credit history and finances.
Before doing anything you should get a copy of your credit history and report. This can be scary but not knowing is even scarier. You don’t want to be sitting down with a lender to discover all of the errors and mistakes on your credit history. Take care of these things I had of time. A 20 point boost in your credit rating could mean a significant reduction in interest rate as well as thousands of dollars over the life of the loan.
#6. Not using your own agent.
When buying a home it’s best to have your own representation so you have someone working for you, on your side, and on your behalf. If you use the listing agent of the home you are interested in, their primary goal is to sell that home for their seller, who contracted to them first. You want your own agent that has no ulterior motives to sell anyone specific home. It costs you absolutely nothing to use a buyers agent because they get paid regardless of which home you choose.
These are probably the most common and a lot of these issues most buyers have no clue about, so I really want to educate my homebuyers so they can make wise financial decisions and love the home they’re in for years after purchase.