5 Mistakes to Avoid as a First-Time Home Buyer
Common First-Time Home Buyer Mistakes to Avoid
Owning your first home can be an exciting time. However, if you’re not careful, it could be overwhelming, too. First-time home buyers may not know where to begin the home buying process. However, if they start the research process early on, they can learn which mistakes to avoid. In doing your research, it’s important to be thorough and understand the process, while enjoying all the milestones. After all, you’re only a first-time home buyer once!
So, what are the 5 mistakes you should avoid? Let’s take a look:
Mistake #1
Not determining how much home you can afford. It’s easy to overlook this. Before you even start looking for your first home, you should figure out how much home you can really afford. For many first-time home buyers, the end goal is to purchase a home and get a loan that will make your mortgage payment reasonable and within your budget each month. If you want to avoid the mistake of looking for homes that are well above your price range, use our affordability calculator to get a better idea of what you can really afford.
Mistake #2
Making the assumption you’re ready. Just because you feel ready for a home and a mortgage, doesn't necessarily mean you can afford a home. A home mortgage comes with property insurance, taxes, homeowner's association's dues, and, in some cases, maintenance, and higher electric and water bills than you would as an apartment renter.
Mistake #3
Shopping without a pre-approval. Home buying doesn't always begin with home searching. Ideally it begins with a pre-approval from a trusted mortgage lender. Remember that buying a home should be a financial decision, not an emotional one. By going to a lender and getting pre-approved first, you will know how much home you can afford and search for homes that meet that criteria.
Mistake #4
Not doing research for first-time home buyer programs. Many first-time home buyers may not be aware of the programs that are available. It’s important to do your homework and find which programs are available in the state you are trying to buy a home. These programs may even offer down payment assistance to qualified home buyers, so it’s worth looking into.
Mistake #5
Using up all your savings on a down payment. Sure, the idea of putting 20% down to avoid mortgage insurance sounds great—if you can truly afford it. However, emptying your savings account is problematic for many reasons, especially when you need a rainy-day fund. If you're moving from an apartment to a home, odds are that you are going to need some furniture or a little bit of money to decorate your new home. Fortunately, there are great down payment assistance programs that do not require 20% down. It all goes back to researching programs available for your area and situation.
So, are you ready to become a first-time home buyer? New American Funding can help. Contact us today to get started!