Buying your first home is a very exciting time for many. But it can also become hectic and disappointing if you aren’t fully prepared or fall into some of the mistakes the first-time homebuyers often make. One of the best ways to avoid falling into making mistakes when buying your first home is to work with a knowledgeable and professional realtor who can help you navigate through the buying process. Nonetheless, here are some of the top mistakes that can turn trying to buy your first home into an unpleasant experience and what you can do to avoid these mistakes.
Not Knowing Your Credit Score
Before you even start to look at houses, you should check your credit score and credit history several months beforehand. A bad credit score or errors on your credit report will cost you in the way of having to pay a higher interest rate on your mortgage. Of course, that’s if you can even obtain a mortgage in the first place. Make sure that all the information is correct on your report and if you do have accurate bad marks on your credit, take action to start repairing your credit.
Not Having Enough Money Saved
It’s great that you have money saved for a down payment on a house…but what about closing costs, homeowners’ insurance and property taxes? Then there are all the essentials you are probably going to need as a first-time homebuyer like a lawn mower, tools for minor repairs around the house and appliances, like a washer and dryer possibly. It’s a good idea to plan on saving at least 5 percent of the price of the home for closing costs and to sock away at least two to three months’ worth of mortgage payments in the bank for unexpected expenses.
Home Shopping Without Being Pre-Approved for a Mortgage
Speaking of mortgage payments, a big mistake that many first-time homebuyers make is failing to get pre-approved for a mortgage before they start looking at homes. While you may have a good idea what you can afford to pay each month, not officially knowing how much a mortgage lender is going allow you to borrow can throw a wrench into your home buying plans. When you have been pre-approved for a mortgage, you have a realistic idea of what your price range will be for buying a home. Having a letter showing that you have been pre-approved for a mortgage also means sellers and agents will take your offer much more seriously.
Getting Stuck Paying Private Mortgage Insurance
While you might not have to put down a 20 percent payment down on your first home, doing so will prevent you from having to pay private mortgage insurance (PMI). However, if you do end up having to pay PMI, as soon as you have paid your mortgage down enough so that you only owe 80 percent of its value, notify your lender. Otherwise, you will have to continue paying this extra charge until your lender automatically cancels your PMI when you reach 78 percent owned on your mortgage.
Not Investigating What Home Insurance is Needed
Depending on where you are buying a home will determine what options you will need with your homeowners’ insurance. Potential hazards, like having a built-in swimming pool will also add to the cost of homeowners’ insurance. Before putting an offer in on a house, find out what your insurance costs will be before hand.
There are number of things to be aware if it is your first time buying. Being aware, prepared, and having the right real estate agent in your corner can be make a vast difference.