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First-Time Home Buyers – Make Sure you Avoid These Mistakes!

First-Time Home Buyers – Make Sure you Avoid These Mistakes!

If you’re looking to buy a new home you know it can be extremely stressful, especially if it is your first home!  There are many common mistakes a first-time home buyer makes when purchasing a house.  Knowing these mistakes are made, we have given you some tips to follow during your home purchase that will help you save money and streamline the process.

1.  Save money for a down payment

The rule of thumb to put down on a home purchase is 20%, but there are lenders that now take less than this amount.  Some first-time home buyers can actually get into programs where you can put as little as 3% down!  If you choose to put down less than 20% your cost can be significantly higher, and you will also have to pay for private mortgage insurance (PMI).  A smaller down payment can still be a large expense, an example would be a 5% down payment on a $200,000 home ($10,000).

2.  Applications for mortgage

Before you start looking for your dream home you need to figure out what you can actually afford.  This requires a breakdown of your current salary, bills, expenses, etc.  There are many home affordability calculators online that can help you determine this number.

You want to also make sure you check your credit score.  Your credit score will play a big role in you getting approved for a mortgage and what rate you will receive if you get the loan.  You want to also make sure you don’t make any larger purchases that would affect your credit score before purchasing a home, such as an additional credit card or auto loan.

3.  Home buying tips

When purchasing a home, you want to make sure you hire the right real estate agent.  You need to find someone that you work well with.  They also need to know exactly what you’re looking for, be highly skilled and motivated, and have knowledge of the area you’re looking to buy your home.

Be sure to also focus on exactly what type of neighborhood and house you want to live in.  This could be a single-family home, condo, townhouse, family subdivision, downtown, etc.  This is information that your realtor should know before starting your home search.  You need to also research home values, safety and crime statistics, nearest hospital, grocery stores, and drive time to your work and other highly traveled locations.  These are all questions that need to be answered before purchasing a home.

4.  First-time home buyer mistakes

One of the biggest mistakes first-time home buyers make is not budgeting for closing costs.  Closing costs for a home usually run between 2% - 5% of your loan amount.  You can shop around and search for the best closing cost prices.  Some of the items in your closing cost would be:

  • Homeowners insurance
  • Home inspection and title
  • Try to also negotiate the seller in paying some of the closing costs

Along with closing costs being one of the mistakes a first-time home buyer makes, here are a list of additional items you should take into consideration:

  • Not saving enough money for expenses after you purchase your home
  • Buying a home to fit your needs today, not in the future
  • Not negotiating the price
  • Having a thorough inspection done (ask questions)
  • Not buying the proper homeowner’s insurance

If you’re in the market for a new home, please feel free to reach out to us if you have any questions.  We can assist you with buying any type of insurance that you may need.  Thanks, and we look forward to hearing from you!  Click Here