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There are several mistakes that can occur if it is your first time buying a home. If you are aware of the most common first time home buyer mistakes, you can avoid them and have a better overall experience. Here are seven of the most common mistakes:
Most people never think about their credit rating before they apply for a loan. If you are considering buying your first home, you should take the time to request your free credit report. This is important to address any mistakes on the report before you apply for a mortgage; doing otherwise could mean your loan is rejected or there are unnecessary delays.
Since not every lender requires a home to be inspected prior to purchase, some buyers will pass on an inspection to avoid the costs. This can be dangerous; a home inspection can identify potential problems with electrical, heating, and plumbing systems as well as structural problems. These problems could be very costly in the long run. Always have a home inspected and insist the purchase and sale agreement have a contingency clause indicating the home must pass inspection.
Many borrowers go to a mortgage lender and request they be prequalified for a home mortgage. However, prequalification and pre-approval are two different processes. A prequalification gives you an idea of how much you may be able to borrow while a pre-approval will give you this information as well as a promise to fund a loan provided nothing changes.
It is common that sometimes you find a house that you simply fall in love with and decide you want that home and only that home. This can result in bad decisions. While buyers cannot afford to be overly critical, it is important to consider the long-term usability of a home. If this is your first time buying a home, think about how much your family is likely to grow, if the layout of the home works well for your needs, and check out the neighborhood before making a final decision. The last thing you want to do is buy a home and find out in six months that it was a bad decision.
One of the most common mistakes made buying a first home comes down to understanding the real costs associated with home ownership. Buyers should make sure they are not buying more home than they can afford, they understand maintenance and upkeep costs, and consider the costs of insurance and taxes when searching for their first home. Buyer should also have a sufficient down payment, and an emergency fund for unexpected repairs.
First time home buyers often believe the value of their home will get higher over time. This often leads them to believe they can “settle” for a home and turn it around in a couple of years for a profit and purchase a different home. This is not always the case; real estate markets are ever-changing and there is no guarantee that the value of the home will get higher.
First time home buying is exciting and when a buyer finds a home they love, they often overlook the dynamics of the neighborhood where the home is located. Before committing to buy, be sure you know if there are any warning signs you should be aware of including crime statistics, proximity to industrial areas, etc. You will be happier in the long run if you take this extra step.
If you are considering buying your first home, contact Federated Lending, located in Bucks County, PA. We can help you determine how much home you can afford, help with pre-approvals and make sure you are not falling prey to some of the common mistakes made by first time home buyers.