First-time house buyers venture into the property market every year. They are usually excited to finally realize their dream of homeownership. However, the buying process can be quite tricky and first-time buyers can make mistakes along the way. To make sure you don’t end up making the same mistakes, ensure you get yourself informed of the following mistakes:
Not Sticking to your Budget
The housing market is filled with homes in all shapes, prices, sizes, and styles. This makes it easy for you to choose a certain house today and choose another tomorrow. Before you head to the market and start your home search, make sure you set a budget and stick to it. You don’t want to target a home you cannot actually afford to buy. You can surely stick to your budget by getting pre-approved for a mortgage loan before you start your purchase journey. This pre-approval will make sellers think that you are serious about your purchase and help you know how much house you can afford.
Failing to Consider Extra Costs
Keep in mind that the final costs for building or purchasing a house are more complicated than taking out a home loan and paying for it. Before you decide to buy a house, think of costs such as closing costs, property taxes, appraisal fees, homeowners’ insurance, escrow fees, moving costs, home maintenance and more.
Putting a Small Down Payment
Putting a big down payment will provide you with many benefits. This makes it important to save up for a down payment as early as possible. Also, you can take advantage of down payment assistance programs that private institutions offer. Learning about down payment assistance can be done using the internet. Here’s why you should put a big down payment on a home.
- Increase your chance of getting pre-approved. Lenders will find possible borrowers who can put a big down payment as less risky so they are likely to pre-approve their loan applications.
- Get a lower monthly payment. Paying a big down payment will lower the amount you will have to pay for your loan every month.
- Build higher equity. A large down payment will increase your home equity. This ensures you don’t stay in the black when you decide to sell your home someday.
- Avoid private mortgage insurance. With a big down payment, you won’t need to get private mortgage insurance. This is insurance that your lender may require you if you put less than 20% down payment