Buying your first home is a huge milestone. You’ve most likely saved up a lot of money, and have been excitedly checking postings for a while. And as spring approaches, you may be ready to seriously commit.
You’ve worked hard for this. It can be tempting to jump at the first great house you find. But amidst the eagerness and nerves, it’s important to avoid these three common home-buying mistakes:
- Failing to contact a lender in advance:
You don’t want to wait until you’ve found your dream home to contact a lender. You should reach out to several lenders before you begin shopping, so they can explain the following:
- What loans programs are available
- Down payment requirements
- The terms of different loan programs
- How long it’ll take to get a loan
When you consult with a lender ahead of time, you can get preapproved for a loan and gain a better understanding of your price range.
- Underestimating how much money they’ll need:
Most first-time homebuyers will budget and save for their home. However, about one-third of buyers will go over their initial budget, and many will experience buyer’s remorse. There are many costs aside from your down payment that you need to consider, such as:
- Big repairs like a new roof or appliance
- Property taxes
- Home insurance
It’s critical that you factor these costs in and plan accordingly. You should be wary about stretching your budget if you have high student debt or other financial commitments.
- Not taking steps to mitigate costs:
Many homebuyers fail to rate shop. According to a national survey by NerdWallet, about half of buyers receive a single rate quote from one lender before applying for a mortgage. This results in about $776 million of lost savings each year.
Additionally, about a third of homebuyers don’t shop around for the best homeowner’s insurance. To receive the best prices, you should get several quotes for this insurance. Buying a house is already expensive, so even minimal differences in rates can have a large impact down the line.
Purchasing a house is exciting – but also a big obligation. It’s important to be financially prepared, and look out for common homebuying mistakes.