If you are a first-time home buyer, there are plenty of stumbling blocks in your way. Be especially aware of these challenges and your home-buying experience will go as smooth as possible.
Here are the top ten mistakes new home buyers should avoid.
1. Failing To Check Your Credit Score
You don't have to have perfect credit to purchase a house, but your credit score is critically important to securing a home loan. This rating is especially important for those who don't have enough cash to purchase a home. Review your credit score for inaccuracies. If you find any issues, reach out to the credit bureaus for a prompt correction.
2. Messy Paperwork
You should always be organized when applying for a home loan. This process requires myriad documents. Prepare all of the documentation ahead of time to ameliorate the process. You must bring several years of tax returns and W-2s, bank statements from the prior two months and a minimum of two recent pay stubs.
3. Assuming Any Down Payment Will Suffice
Take the time to calculate your income, savings and expenses to determine exactly how much you can afford for a down payment. This figure will determine the price range of the types of houses you should consider for purchase. If you go choose down payments at random, you might end up overextending your budget.
4. Failing To Establish A Budget
Speaking of budgets, you shouldn't put out offers on homes until you know how much you're able to pay. Examine your income, assets and liabilities.
If you are overextended with liabilities and typically have little (if any) money remaining at the end of the month, securing a mortgage might not be prudent. Failing to make the minimum monthly mortgage payment by the due date will harm your credit and could cause a default.
5. Lack Of Flexibility
It's highly unlikely that one home will have everything you're looking for, especially if it's in your budget. Be flexible. Make an offer on a property that has the majority of the features you desire. You can always modify the home after purchase.
6. Failing To Determine A Mortgage Amount
Don't start shopping until you have figured out how much money a lender will provide for the home purchase. The mortgage you qualify for plays a major role in determining your price ceiling.
7. Not Asking For Help
You don't have to travel this road alone. Find a trusted and experienced real estate agent to guide you through the process. Real estate agents are excellent at securing great deals on properties and answering any questions you might have during the home buying process.
8. Looking At Too Many Types Of Homes
Don't waste your time looking at every available property on the market. Only consider homes that match your unique needs. Figure out whether you want a condo, traditional house, townhouse or a multi-family building with an individual unit.
9. Assuming The Home Is In Tip-Top Shape
The home you have your eye on might look nice but could have some serious problems lurking beneath the surface. Have a thorough home inspection performed before committing to the property, regardless of how it looks.
10. Not Researching Your Options
Look everywhere for financing options. First-time home buyers have all sorts of help when it comes to financing. From loans for buyers who lack the typical 20 percent down payment to loans backed by the federal government, plenty of assistance is available.
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New to the home-buying game? Our 5-Step Buying Guide provides you with a plan to find, buy and secure your first home.