Buying your first home is a big decision, and is both scary and excited. It’s easy to make these common mistakes that will leave you with buyer’s remorse later on. It’s important to know what to expect and how to avoid these pitfalls.
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A lot of first-time buyers look at homes on sites like this link before they have got in front of a mortgage lender. In today’s market, there’s more demand for affordable homes than there there homes on the market.
In this competitive market, you will find it hard to have your offer taken seriously unless you have a mortgage preapproval or cash in hand. This is because sellers don’t want to take a risk on someone who doesn’t know if they can get a mortgage.
Get a fully underwritten preapproval. Being preapproved shows you’re a serious buyer with the finances to get the loan you need.
First-time buyers often get a mortgage from the first and only lender or bank they talk to. If you don’t compare offers, you could miss out.
The more you shop around, the better comparisons you’ll be able to make in order to make sure you get a good deal.
Speak to at least three different lenders and a mortgage broker. Try to get all your rate quotes in one day, as rates can change often. Compare rates, loan terms, and lender fees. Take customer service into account too.
It is easy to fall in love with a house that could stretch your budget a bit, but it is never a good idea to overextend yourself when it comes to money. House prices are trending upward, so it’s very important to stay close to your budget when you buy.
Buying a home that you can’t really afford puts you at a much greater risk of foreclosure if you happen to fall on hard times financially in the future. You will also have a lot less room in your monthly budget for things like your bills and other living expenses. If you’re struggling to make ends meet, you’re also going to struggle to fund your retirement account, save for a vacation, or save for your child’s future education.
Focus on what monthly payment you can realistically afford, rather than fixating on the maximum loan amount that you can qualify for. Just because you can qualify for a $300,000 loan doesn’t mean that you can afford the monthly payments that come with a loan that size as well as your other monthly expenses. Everyone’s case is different, so take your whole financial profile into account when you decide how much you can afford. It’s very important that you are honest with your lender or broker about your finances. You’re the one who has to repay that loan, and you don’t want to be stuck will a bill you can’t pay.