Congratulations on deciding to make that dream house come to life! Buying a home can be pretty exciting and daunting at the same time. This mixed feeling is more apparent to first-time homebuyers who have no idea what to expect and do not want to make any mistakes with this significant life decision.
To help you, we have compiled a list of mistakes that homebuyers usually make based on our experience with past clients and applicants. Let this article guide you on what you should and should not do as a first-time homebuyer.
Common Mistakes First-Time Home Buyers Make
1. Not Having Enough Savings
You do not need to have half of the cost of the property you want to buy. However, you need enough savings in your bank account that would qualify you for a mortgage. Each lender has a set of qualifications you need to meet. Some banks would demand at least a month’s savings, while others require three months’ worth. You are free to spend this money however you want after you qualify for the loan.
Personal savings are different from cash reserves. The funds are left to the borrower after paying their down payment and closing costs. This money is proof that you can spend several months of mortgage payments if a financial emergency occurs.
2. Not Setting a Realistic Budget
It is crucial to have a budget before you shop for a home. A set budget can limit your choices and would not cause you too much stress. When setting a budget, do not forget about your other financial obligations to fulfill, plus the savings you need to set aside. Just because you have extra money does not mean you have to spend it on your new home.
Do not forget to pay yourself so that you have a fund to spend for the rainy days.
3. Not Keeping a Good Credit Score
Every homebuyer at least has an idea that they need to have a good credit score before they qualify for a mortgage. While it is true, know that even individuals with bad credit still have the chance of getting a mortgage. The only difference is that people with good credit scores pay less on their monthly mortgage than those with bad credit. If you want to make the most of your money, try to have and maintain a good credit score before applying for a mortgage.
4. Thinking You Would Not Qualify for a Mortgage
Again, you can qualify for a mortgage even if you have a low salary or savings. Lenders usually look at two particular criteria before accepting a mortgage application. They want a borrower with low debt and knows how to pay their bills on time.
You are more likely to be approved if you meet these qualifications and have just enough money in your savings account.
5. Thinking Homebuying Expenses Stop After Buying the Home
Note that the mortgage is not the only expense that you pay for once you purchase a house. There are many other expenses that you should consider even before you decide to buy a property. Here is a quick breakdown of the things a new homebuyer needs to pay for:
- Down payment (20 percent of the home value or less)
- Private Mortgage Insurance (if applicable)
- Homeowners Association Fees
- Homeowners Insurance Premiums
- Property Taxes
- Monthly Loan Payment
Make sure that you put these other expenses into consideration before finalizing your budget for your home. If you have doubts, consult with a qualified broker before proceeding with your purchase.
Buying a house can be discouraging, but there is no other way for you to own a property you can call your own unless you buy one for yourself. When you are guided correctly from the beginning, you can make fewer mistakes or none at all. You only need to find people whom you can trust and give you great advice.
If you need the best Florida mortgage brokers, My Lending Pal is here to assist you. We take our time to learn about our clients’ needs, give them options, and thoroughly discuss each, so they understand everything well before deciding. Request a quotation from us or learn more about what we do by contacting us at firstname.lastname@example.org or 833.379.0797.