Purchasing a home for the first time is often the dream of many. Looking through a variety of homes can be a fun experience to have but often distracts home buyers from the challenges of the process, which leads to mistakes being made. Understandably, purchasing a home can be a daunting experience, and one riddled with traps. Therefore, the following list includes some of the most common mistakes made by homebuyers and why you should avoid them.
Not Shopping Around
Before placing an offer on a home, you must first get approved for a home mortgage. This can be a lengthy and frustrating process, but one that is extremely necessary. The mistake that most new home buyers make during this process is not shopping around for lenders. It may seem like you should take anything you can; after all, you’re a new home buyer. The reality is that lenders are more than willing to fight for your business, no matter your experience in the market. So, take the time to shop around and let other lenders know that you’re doing so.
Not Knowing What You Can Afford
As stated above, it can be easy to get lost within the touring part of the home buying process. Extra bedrooms, finished basement, and everything in between can entice a buyer to purchase a home. This can be a great thing if it aligns with your approved home loan. However, purchasing a home solely on what you are approved on is one of the most common mistakes made by new buyers. Homebuyers quickly find out that they can’t make the monthly payments and thus are forced to leave the home they thought was within their budget. This is why it is so important to understand how much you can afford, not just in total but each month as well.
Placing a Small Down Payment
The golden rule regarding down payments is that you should put down at least 20% of the mortgage. Although this is certainly fine to do, data has shown that most newer buyers often regret not waiting to place a higher amount. This mistake is often tied to lenders offering low or zero down loans to people. It can be enticing, but it is in your best interest to wait until you’ve collected more than 20% to begin looking for homes. This is because a bigger down payment means more affordable monthly mortgage payments.