As a first time home buyer, you may feel like a fish out of water when it comes to the process of getting a home. If you’re ready to buy your first home, there’s some key mistakes that you should avoid.
You Think That You Don’t Need Help From A Professional
So many homebuyers think that they can save themselves a few dollars by avoiding working with a realtor. This is a big mistake. Realtors are a valuable resource for buyers and will help you throughout the process of purchasing a home. Realtors can help guide buyers step-by-step while providing assistance with things like negotiations and making sure all of the paperwork gets from point A to point B. You’ll also need other professionals involved in this process of home buying including lawyers and loan officers. Having these people on your team protects you and gives you a backing of knowledge that you wouldn’t otherwise have.
Don’t Skip Pre-Approval
Getting pre-approved for a mortgage is key before you even start to search for a house. The pre-approval letter is a great resource in helping you land the home of your dreams. If you’re going up against other bids on a home, your bid will be seen as more serious if you have been pre-approved. Getting a pre-approval lets sellers know that you’re serious about the whole process of buying a home and are ready to make the financial commitment.
Know The Costs Associated With Buying A Home
Just because you have the monthly income to pay a mortgage doesn't mean you’re financially ready to buy a home. There’s a few things that need to be in place before you can even commit to buying a home. First, you’ll need to make sure your credit score is up to par. Next, you’ll need to have enough saved up for a down payment. Without a down payment of at east 20% of the purchase price of a home, you’ll need to pay for private mortgage insurance (PMI). There’s plenty of other costs that you’ll need cash on hand for when it comes to buying a home. This includes home insurance, home inspections, closing costs, property taxes, HOA fees, and maintenance. In other words, there needs to be some wiggle room in your budget for all of the extra costs that go into closing on a home and maintaining a home.
Don’t Completely Deplete Your Savings
Just because you have been saving up for years to buy a home, doesn’t mean you need to completely deplete your savings in one pass. If you lack an emergency fund, you’re not buying a home with a responsible financial cushion. While you’ll probably take out a good chunk of savings in order to purchase the home, you need a bit more. Experts say that you need about 3-6 months of expenses saved up in case of the event of illness, job loss, or other emergency. Hence the name “emergency fund.”
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