Buying your first home can be as scary as it is exciting. It isn’t a momentary decision. If you don’t have any experience and knowledge in the home buying process, you may get swept away by larger than life claims of unprofessional real estate agents. And land up making mistakes that will leave you in a state of remorse later.
Here are 5 common mistakes that first time home buyers should avoid
Not applying for a mortgage before searching for a house
The excitement of owning a house is such that you forget to do first thing first. Many first-timers start looking for a house before applying for a mortgage. In many markets, there are high demands than affordable homes, which makes the housing inventory tight. In such competitive markets, you would lose the property if you don’t have a preapproved loan.
You may also land up selecting a property beyond your budget and fail to finance it later.
Contacting only one lender
Lenders also compete, and that can benefit you in bargaining for the lowest possible rates. If you contact only one lender, you may pick up the loan at higher interest rates and pay a higher price for the property. Therefore, shop around with at least three lenders to compare rates and get a good bargain.
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Moving too fast
Buying a house is a big decision that takes time. Especially when you have to deal with the nitty-gritty of the mortgage process. Moving too fast to end the process means you might be unable to save enough for a down payment and closing costs. It can also keep you from addressing items on your credit report that are pulling down your creditworthiness.
Exhausting your savings
One of the biggest home-buying mistakes is using all your savings for down payments. Some first-time buyers spend all their money to make the 20 percent down payment, and put themselves at the risk of living on the edge. Keep at least three to six months of expenses in an emergency fund before closing the deal.
Being careless with credit
Lenders check your credit reports before approving the mortgage to ensure that you have a strong financial profile. Any new loans or credit card accounts on your credit report can jeopardize the closing and final loan approval. Buyers, especially first-timers, often learn this lesson the hard way. Keep your credit credentials strong before applying for a mortgage. Don’t open new credit cards and close existing accounts.