Before you purchase any big-ticket item, you should do your homework. Buying a home for the first time is no exception to this rule. Fortunately, many homebuyers that have come before you have paved the road of success. Learn from their mistakes so you can avoid making the same ones.
It’s All About the Mortgage Payment
Many first time homebuyers make the mistake of focusing on the mortgage payment. They figure that if it’s in the same neighborhood as what they’re paying in a rent, they can afford to be a homeowner. Not evaluating the costs of homeownership beyond the mortgage payment is a big mistake because there are numerous other costs to consider when buying and maintaining a home:
- Closing costs
- Down payment
- Maintenance costs for upkeep on the home
- Home repairs
- Replacement costs
Finding a Home First, Financing Later
Many people think they should find the home they want to buy and worry about establishing the financing for the purchase later. In reality, the order should reversed. You should set up the financing first. Pre-qualifying for a mortgage provides you with the amount of a mortgage you can qualify to obtain, which also tells the price range of homes you should be viewing.
At the very least, establish the financing in conjunction with looking for homes. The last thing you want to do is find the home of your dreams to only be disappointed when a lender won’t finance the purchase.
Going it Alone
You wouldn’t diagnose an illness without consulting a doctor or perform surgery on yourself. You shouldn’t try to buy or finance a home without help from professionals who know what they are doing either. Real estate agents, attorneys, tax consultants and mortgage advisors all provide you with the advice, guidance and information you need to make informed decisions.
Emptying Your Savings for the Down Payment
You’ve been saving up for this day for years and now you’re going to write the check for the down payment. You decide you’ll drain the account. A lower mortgage amount means a lower monthly mortgage payment, right?
Yes, it does, but if you don’t have a cushion of savings then you are in big trouble if you have a cash emergency. Make sure that you put a down payment amount down on the home that is comfortable for you, but don’t deplete your savings in the process. Maintain a cushion in the bank in case you have a personal or house emergency.
Financing New Furniture and Appliances
New homeowners tend to run out and put on credit new furniture and appliances to complete their dream home. Financing these items increases your out-of-pocket costs for making these purchases. Instead, spread out your purchases so that you can pay cash and avoid incurring interest on other purchases.
Buying a home for the first time is exciting. It is also a road with many holes if you don’t know what you’re doing. Learn from those that have made mistakes before you and avoid these common pitfalls when buying your first home.