Buying your first home entails closing charges, complex paperwork, and tiresome mortgage procedures. With many things on your mind, this makes it much easier to get carried away or miss out on crucial information. Buyers, both first-timers and those planning to invest in another property, tend to make a few mistakes throughout the process. With that in mind, this article is your guide to aid you in streamlining the purchase, putting all parties involved at ease.
1. Not Determining Your Finances
Determining your budget is the start. Don’t let your rationale slip away. That’s because you might get approved for a financial loan that you can’t afford. You’ll have to factor in your monthly expenses, like credit cards, bills, rent, and more. You’ll also need another plan that will protect you from uncertainties.
That can be an insurance policy or a bank savings account. Determine how you’ll be settling the mortgage before you start searching. Before finalizing the deal, make sure that the overall costs are within a reasonable and comfortable range.
That will allow you to be more flexible. Increasing your credit scores is another means to get lower and more affordable interest rates. If you think your dream house is out of the budget, look for alternatives.
2. Not Applying for Pre-approvals
Having a pre-approval letter indicates that you got qualified for financial assistance for buying the property. That will also allow a seller to take you seriously. Do it before shopping. Alternatively, you can also get pre-approved in the middle of the mortgage process.
3. Buying without Any Knowledge
It’s best to list down the features you want from a house. For example, suppose your little ones dream of having an outdoor area where they can play with their family pets. If that’s the case, don’t be tempted into buying an apartment due to its location or price. On the flip side, don’t be too picky. You might end up ignoring essential factors that can affect the purchasing process.
For example, you’re unhappy with the current colour scheme. If that’s the case, you’ll have to plan factor in the renovations. Don’t waste your money. Bear in mind that even simple projects can quickly add up. Meet with your chosen mortgage advisor to learn what steps you can take money-wise, especially if the property is old or damaged.
4. Missing Out Home Inspections
Letting an inspector assess the house’s condition is a must before closing a deal. Home inspectors will check for rot, pest infestations, plumbing, heating, electrical, or roofing problems. In addition, they’ll inspect the surrounding areas for plants or pipelines that can affect the property.
Most sellers will already have an inspector by their side. However, it’s still best to call for one to assess the property without any bias. Make sure to ask for a complete disclosure so that your inspector can make the needed adjustments if something comes up.
5. Overlooking the Closing Costs
Most buyers will overlook the overall charges of buying a house. You won’t only pay for the monthly mortgage but also the closing charges, including underwriting, title, recording, and appraisal costs. You’ll also have to settle the utility fees, homeowners’ insurance, private mortgage insurance, property taxes, and agent’s commission. Think about the monthly and one-time costs of buying a house before closing the deal.
6. Not Preparing Yourself for the Process
Organize the documents needed for the application to streamline the process of buying your dream house. You’ll have to prepare your bank statements, tax returns, and items that support your assets and liabilities. It’ll also help to track your credit profile. Build an excellent financial profile to get the most affordable interest rates.
You can also ask for estimates from multiple lenders to compare the products that fit your budget. Bring the pre-approval letters because that will determine how much you can afford to spend on a specific property.
7. Not Reading Your Agreements
Fraud is punishable by imprisonment. In comparing estimates, don’t forget to verify the agent’s license. Don’t deal with individuals or companies that use aggressive marketing techniques. Find the time to read the agreement and keep track of changes on the contract. If you’re still confused with some stipulations, get answers to your concerns until you understand the contract’s features.
Don’t sign a blank document or without understanding its conditions. You’ll also have to prepare accurate and complete information while meeting with an agent. Don’t be hasty in signing the documents. Moreover, don’t let the agent rush you into signing the deal.
Follow these simple tips to avoid the most common mistakes you make when applying for a mortgage loan for your first home. That will allow you to find the most affordable deals with the most flexible payment terms on your home.