Home buying is perhaps one of the most important financial decisions you have to make in your life. Therefore, you should be very careful and know the ins and outs while buying a house for the first time. Many first time homebuyers make certain mistakes, which make it difficult for them to manage finances later. Therefore, as a first time homebuyer, you should be aware of such mistakes, which are discussed below.
Assuming you can buy the first house you like
Often the first time homebuyers think that they can buy the first property they like. However, they are unaware that some other person may make a better offer and grab the deal. So, never show your eagerness to buy the property as doing so, you might be paying more and cannot settle for a suitable deal.
Not giving importance to credit score
One of the greatest money mistakes first time homebuyers make is not paying importance to a high credit score. You should know a credit score of 720 or higher will help you obtain a mortgage loan at suitable terms and conditions. Therefore, before you apply for a mortgage loan, always check your credit score and try to increase it in order to take out a suitable home loan.
Paying all credit cards beforehand
You might think that your chances of qualifying for a mortgage loan increases if you do not have any debt. However, in reality, the bank looks for at least 2 to 3 active trade lines for about 12 to 24 months in order to approve your loan request. Therefore, you don’t have to repay all your loans, instead maintain a good debt to income ratio.
Not involving a professional inspector
If you skip the inspection of the home, you will be unaware whether or not any of the walls of the house is poorly insulated. It will only increase your heating cost in the winter months or cooling cost during summertime. The seller will usually not notify you regarding these faults. Therefore, always involve a professional inspector so that you can negotiate with the buying price of the property.
Getting help from any mortgage loan officer
While getting help from a mortgage loan officer, check out whether or not he/she has enough experience. It is better to interview your loan officer and be sure that he/she has at least 15 years of experience into the business.
Not estimating the cost properly
As a first time homebuyer, you might not be able to properly calculate the cost of actually owning a house. Therefore, if required, get help from the professionals to calculate the exact cost of maintenance and repair work or if there’s an increase in the utility cost. It is a better idea to keep aside at least 1 percent of the home purchase price for repair work.
Settling for the wrong house
The experts are of the view that a first time time homebuyer should not choose a foreclosed property. Doing so, you might have to compete with cash buyers and if you are trying to buy a house on a short sale, then you may have to wait for a longer period.
While buying your first house and taking out a mortgage loan, you should always plan a budget to make room for extra monthly payments. It is always better to plan a budget and decide whether or not you can handle the mortgage loan and the other associated cost of buying the house, with ease. It will help you to stay current on the loan even if you experience some financial problems. If required, take help of a financial adviser to buy a house and take out a home loan which you can manage comfortably and efficiently.