Buying your first home is an exciting experience, but failing to properly research the process could sour the moment. There are many potential pitfalls that first-time homebuyers need to be wary of to avoid making a mistake that could have long-term implications. Before starting your search for your first home, here are some common mistakes to look out for.
Skipping Pre-Approval
One of the biggest mistakes you can make when looking for a home is failing to get pre-approved for a loan before starting the search. Pre-approval helps to determine what a lender is willing to loan you and at what interest rate.
Without pre-approval, you do not know which homes are within your limit. As a result, you could not only end up wasting your time on pursuing a home you cannot get approval for, but also the seller's time.
If you have signed a purchase contract and put up earnest money, you could even lose out on your deposit if your contract did not have contingencies that allowed you to back out of the agreement.
To avoid this issue, simply apply for pre-approval. Your lender can view your income, expenses, and credit history and make a determination regarding what you can borrow. You can then apply for a first time buyer loan.
Failing to Factor in Hidden Expenses
When you purchase a home, there is far more to being an owner than paying the mortgage and insurance. There are many other hidden expenses to consider that could impact whether or not you can afford a home.
Hidden expenses can include appraisal fees, property taxes, moving costs, and repairs. Owning a home means that you are responsible for every aspect of its upkeep, which can be difficult for first-time homeowners to fully grasp until after the sale.
To get a better sense of what you can expect to pay for your home, work with a lending agent or realtor. Both can provide you with a detailed listing of the possible expenses so you can factor them into your budget.
Ignoring the Resale Value
Although your main focus is most likely buying your first home, you also need to focus on the resale value of your home. There is no guarantee that you will live in the home for the rest of your life. Different circumstances, such as growing your family, could result in a need to sell.
Before buying a home, weigh whether or not it will be difficult for you to sell the home in the future, if necessary. Work with your realtor to determine what it could possibly require to sell your home in the future.
Share18 May 2016
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