Things First Time Home Buyers Overlook

Home buyers, whether first time or not, face many challenges before closing on the home of their dreams.

Getting a mortgage can be a challenge in and of itself these days. Then you need to find the right real estate agent to assist you, looking at perhaps dozens and dozens of homes looking for that perfect fit. All this while trying to stay within a budget.

Just because you think you can afford mortgage payments doesn’t necessarily mean you can afford the home. There’s more to it than that.

Homeowner’s insurance, taxes, homeowners association dues, maintenance, and higher electric and water bills are some of the costs first-time homebuyers tend to overlook. Keep in mind, property taxes and insurance have a tendency of going up every year.

Home buying doesn’t begin with home searching. It begins with a mortgage pre-qualification. Get pre-approved, THEN find a home. This way you’ll make a financial decision versus an emotional one.

Spending all or most of your savings on a down payment and closing costs is one of the biggest mistakes first-time homebuyers make. Some people scrape all their money together to make the 20 percent down payment so they don’t have to pay for mortgage insurance, but they are left with no savings at all.

If you have to use every dime you have in savings in order to scrape up enough cash (20%) to avoid paying mortgage insurance, you’d be better off not living on the edge and pay the mortgage insurance premium until you have enough equity in the home to have the insurance dropped.

So you’ve found the perfect property and gotten pre-qualified for the mortgage. The contract is signed, and you close in 30 days. Don’t go out and start buying furniture for the house and run up credit bills in the process. There’s a good chance the Lender will pull your credit report again before closing to make sure your financial situation hasn’t changed since the loan was approved.

Buying a home can be a rewarding time in your life, but it can also be a stressful time, so make sure you take these things into consideration before you even start the process.