Buying a home for the first time can stir mixed emotions of excitement and dread in anyone. It’s exciting to consider finding a home that you can make your own, but the responsibility and finances involved can also lead to anxiety and hesitance. It is also easy for first time home buyers to get in over their heads by not considering all that is involved in buying and owning a home.
At Stonebridge Mortgage Group, we understand the difficulties first time home buyers face. There’s a lot of information to take in and consider when it comes to buying a home and it is easy to get overwhelmed. To help guide yourself through the home buying process, consider the following mistakes commonly made by first time home buyers:
Not Considering Fees Beyond the Mortgage Payments
The first thing that comes to mind for most people considering buying a home is the mortgage payment. This isn’t the only cost that you should consider when it comes to buying a home, though. Other costs include property insurance, taxes, homeowners association dues, maintenance, and higher electric and water bills. It’s not about if you can afford the mortgage payment now. You also have to consider if you will have enough for future costs as well. Things like property taxes and insurance tend to go up yearly, too. Make sure you plan and budget to afford all of the costs that come with buying a home.
Looking for a Home Before a Loan
Shopping for homes is certainly more fun than going to a lender’s office and going over your financial situation. Without getting prequalified for a mortgage, however, you have no real idea what your budget should be. You don’t want to shop for homes out of your price range and get your heart set on something you simply can’t afford. Getting prequalified first will allow you to make the smart decision.
Not Getting Professional Help
Going into the home buying process for the first time without professional help is not a good idea. First time home buyers will want to hire a reputable real estate agent, a good loan officer or broker, and perhaps even a lawyer. These professionals will make sure you are getting the most out of the home buying process. If you try to deal with a listing agent on your own the first time, they are only going to show you their listings. Hiring a buyer’s agent is necessary. If you are not referred to the agent, loan officer, or mortgage broker you decide to hire by someone you trust, insist the agent provide references from past clients.
Using Up Savings on the Down Payment
You don’t want to drain your savings all on the down payment. Some first time buyers think its best to spend all their savings on the 20% down payment to avoid paying for mortgage insurance. While this can save you on monthly mortgage payments, not having any savings leaves you in a precarious position day to day. Having rainy day savings is crucial for unforeseeable emergencies.
Getting New Loans Before the Deal is Closed
Once you get prequalified for your loan and sign a contract for the home you want, it can be tempting to celebrate by taking out another loan for another large purchase. Perhaps you want to get started on getting furniture for your new home or are looking for a new car. Resist the temptation. Wait it out until the deal is closed. Lenders often pull credit reports before closing to ensure the borrower’s financial situation has not changed since the loan was approved. Any new loans on your credit report can jeopardize the closing.
First time home buyers must be cautious, thoughtful, and plan ahead. It’s not worth rushing the home buying process, and sometimes the path that seems easiest isn’t the best path to take.
Stonebridge Mortgage Group can help guide you through the home buying process. We help get you pre-approved for a mortgage and help with your real estate loans and other mortgage solutions, both residential and commercial. We serve the greater Portland area and are in Gresham, Oregon.