Buying your first home can be so exciting!
It can also be overwhelming.
Maybe you just graduated from college. Maybe you are newlyweds, or maybe you have finally saved up enough money to leave the rental world. It’s a thrill, but it can also be complicated.
When setting out on the adventure of looking for your new cottage or castle, you can easily make the journey harder by stumbling on these “all too common” pitfalls.
What are they? So glad you asked.
1. Looking at houses before you get qualified for a mortgage.
You got caught up in the wonderland of the moment (watching lots of HGTV) and forgot to sit before a lender and see if you are even financially eligible.
Depending on the market, inventory can be pretty tight due to more buyer demand. If you aren’t pre-approved, you could lose your dream home once you have found it. Without being qualified, you won’t even know what your price range to “dream” is.
So make sure and get qualified first.
2. Only talking to one lender.
A good lender will help you thoroughly analyze your situation and let you know if they see any potential roadblocks down the road. They can also help clarify your home-buying options.
Make sure and talk to at least three and compare their fees, rates and loan terms. Also, pay attention to their customer service and response times. Both are important in the lending process.
3. Buying a house that you can’t afford.
This happens a lot. And in the case of young couples, it is almost a pandemic in and of itself. Don’t let your eyes overload your stomach. That fifth bedroom for all your guitars (that you don’t even have yet) isn’t as appealing when it comes to a weighty price tag that bangs on your bank account each month.
Get what you love and love what you get. Just make sure it isn’t a burden later. Talk to friends and family and get their perspective also. Those close to you will be able to see the purchase from an unbiased perspective.
4. Ignoring your credit.
I know, I know. I sound like your Mom here but this one can hurt you. Being able to buy a home starts early in the ways we treat our finances. All those “needs” that were purchased earlier in life and then later were neglected to pay off.
Any new loans or credit card accounts can jeopardize you at closing. Take the time and build your credit up to a good standing and get rid of any of those accounts that you don’t need.
During the process of the sale, be fiscally responsible and don’t make any large purchases on credit or get a new loan if you can help it.
5. Moving too fast.
Buying a home is a process that shouldn’t be rushed. It’s about that word we all love to hate…
It would be good to get a timeline of the process at least a year in advance. Keep in mind that it could take months or even years to be able to save up enough money or to repair bad credit or save up for a down payment.
Closing on a home includes a lot of details and lots of little costs that you may not be expecting. The more you have saved up, the easier the process will be and the more confident you can feel about everything going just like you want it to go.