Making mistakes when you are buying your first home is easy. Not only are you eager to achieve a significant milestone in your life, but you want to fulfill your vision of the future. Once you can imagine it, you may make decisions in haste.
This is common. The following are easy pitfalls that first-time homebuyers fall into. Know them so you can catch yourself before you put yourself in a situation you can’t get out of.
Looking Too Soon
In some parts of the country, a seller could accept an offer in a matter of days. If you are ready to buy a home, there’s nothing wrong with going to open houses. But you will be behind if you want to pursue a purchase. Think of it as going shopping without money.
Talk To A Lender/Loan Officer
This is a continuation of the last point. Get pre-approved for a mortgage. Go into an open house with a real estate agent and the ability to make an offer.
Can you get pre-approved from a lender in 10 minutes by only using your phone? In some cases, yes. Just because you can doesn’t mean you should. Because you are potentially borrowing hundreds of thousands of dollars, have a conversation with a lender/loan officer. Find the loan that fits your circumstances and financial position.
Talk to more than one lender and compare your options.
Misunderstanding Your Budget
First-time home buyers are usually renting at the time they decide to buy. If they are paying $2500 a month in rent, they might base their budget on it. Here’s how they can go wrong.
They multiply their $2500 by 12 (months). Then they multiply that number by 30 (30-year mortgage).
- 2500 X 12 X 30 = 900,000
If $2500 is the max amount they can pay each month, then they cannot afford a $900,000 home. At that price, and with an interest rate of 3.5% over 30 years, the monthly payments would be over $4000 a month.
This isn’t even factoring in property taxes and possible HOA fees. When you talk to a mortgage lender, they help you determine what you can afford.
What Aren’t You Seeing?
This is something that very few people do: visit your potential house at various times of the day.
You may leave a showing and be in love with a house. But what are the neighbors like? Every night at 9 pm, do they play loud music off their back deck? What is behind the house?
There are scenarios where people have discovered that there was a store behind their future house. And that store happened to be a bakery. Trucks made deliveries each morning at 4:30 am. Without getting a feel for the area, this wouldn’t have been discovered until their first night in the new home.
Thomas & Webber Law at the Lake
Real estate transactions don’t have to be anything less than a positive experience. At Thomas & Webber, we believe that we are a key component of that. If you are about to buy your first home, we will focus on making this a fun, enjoyable, and educational experience. Contact us online to schedule a consultation. We can also be reached at 704-663-1600.
Thomas & Webber Law at the Lake
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