You’ve talked to a lot of people who have purchased a home and you feel it’s time to purchase your first home. You start by completing a little homework; the more you read, the more questions you have and it can be little overwhelming. Here are a few mistakes to avoid when purchasing your first home
Choosing the Wrong Realtor
A Real Estate Agent is the greatest source of information and will guide you through the buying process. A good Realtor will look out for your best interest and not focused on making the sale. For more information, please do not hesitate to contact me.
Buying More Than You Can Afford
When purchasing your new home, make sure you can afford it. Do not squeeze every ounce out of that dollar to get that large kitchen or three car garage. You can always add the gourmet kitchen latter. Mortgage Lenders use Debt to Income ratio to calculate what you can afford. There are two ratios; the first ratio is 28%; which is the total mortgage payment a person can sensible pay for. The second ratio is 36%; which is the total amount of debt obligations a person has. Both are calculated on Gross (pretax) Income.
Not Getting Pre-Approved for a Mortgage Loan
Overlooking this step can lead to heartache. Getting pre-approved for loan means that a qualified lender has reviewed your financial information and completed the proper evaluation of your situation. This will allow you to know the value range of your first home.
Putting All Your Money Toward a Down Payment
Using all of your hard earned savings on a down payment will not allow for purchases AFTER you move into your first home. Make sure you also consider closing costs, inspection fees and other miscellaneous costs. There are many other aspects of ownership and having some savings is beneficial.
Misunderstanding the Costs of Buying a Home
Knowing the costs of purchasing your home is extremely important. It’s more than the listing price; there are home inspections, an appraisal, property taxes and possibly repairs to the house. These costs are disclosed in the Good Faith Estimate; also known as the “GFE” (which is also part of the pre-qualification process).
Making a Weak Offer on a House
When you’re ready to make an offer on a house, consult with your trusted Real Estate Agent. I will be able to tell you if the home is priced too high or too low. Making a proper offer will let the seller know that you’re serious about purchasing the house.
Neglecting the Home Inspection
A home inspection is one of the most important steps in the buying process. A home inspection gives you an indication of the quality of the house. It will alert you to any pre-existing issues or potential items that require repairs.
Becoming Too Emotional
Buying your first home will be stressful. Emotions cloud the thought process and having a clear state of mind will allow for proper decision making. The end result is worth it!
Purchasing Items on Credit Before Closing
Your first home will be closing soon and you think you’re in the clear. So you go out and buy a few large ticket items credit; this could be a deal breaker. Mortgage Lenders typically check your credit before the loan is funded and if you add any credit lines prior to closing; it will change your Debt to Income Ratio and your dreams of owning your first home will have to wait.