As promised, this week’s post is the continuation to last week’s Common First Home Buyer Mistakes, Part One. If you’ve missed the prior blog posting, be sure to check out the first one through five most common mistakes 1st time home buyers find themselves falling into. In addition to the first five, below are the remaining six through ten items every first home buyer should know and to avoid…
6. LACK OF SAVINGS = for many 1st time home buyers, going home shopping takes over prior to planning out the financial steps needed in order to have all the keys pieces to the puzzle in line. This happens to us all. Buying a home is fun, exciting, and a milestone in one’s life. The mistake is shopping before the money is in the savings account and if there is a ‘home purchasing’ account started, there are often many items left out of consideration; causing first home buyers with not enough money saved up. To overcome this, be sure to consider and estimate for items in addition to your down payment. Such items consist of a variety of fees ad expenses like mortgage processing, insurance, and home inspection.
7. DIDN’T SHOP AROUND FOR THE RIGHT LENDER = shopping for the right lender is very similar to shopping for the right car; there are different types that specialize in different areas. Lenders, like cars, also have different price points for their different services and abilities. As a 1st time home buyer, it is critical to speak with more than one lender. Interest rates vary and change daily, causing lenders to be in the know and on top of their game. If your lender misses a drop or anticipated increase of rates, either way this mistake can dramatically affect your monthly mortgage payments. Interest rates also vary pending the mortgage lender; thus, the more you shop around, the more knowledgeable you will be in selecting the right lender for you.
8. NOT CONSIDERING MORTGAGE FEES = one thing to consider when talking with mortgage lenders is knowing that many lenders may quote rates in different ways; meaning, some lenders may require points paid up front while others may not. Some lenders may offer low rates but adjust the cost up charging higher processing fees. To help know the best possible option, try using a mortgage calculator. This tool can help to provide information to compare; including the breakdown of both mortgage lender points and fees.
9. NOT CONSIDERING AN FHA LOAN PROGRAM = stepping into homeownership for the first time can provide various incentives, especially when considering a FHA loan. For first home buyers, FHA loan programs for popular and well known for lower interest rates, giving you lower monthly mortgage payments that can help ease one into the responsibility of making a monthly mortgage payment. Though FHA loans require home buyers to acquire homeowners insurance, the overall cost, pending the purchase price of the home, down payment placed, credit score, and choice of seasoned lender, many first home buyers receive a opportunity to own at an overall lower cost.
10. AVOIDING MORTGAGE PAYMENT RED FLAGS = for many 1st time home buyers, red flags waived during the home buying process are missed for various reasons. Mainly, the flags are ignored out of sheer excitement. To avoid this mistake, make sure to educate yourself about the risk involved with such mortgage loans like adjustable/flexible payment options. As attractive as they appear initially, the element of guarantee is not included and with the possibility of ‘change’ mixed in, this is an equation for danger. Though adjustable/flexible mortgage payments offer lower monthly payments, there is a end point to the agreement and with no rate stated, your mortgage payments can sky rocket out of your range. Many homeowners suffering today are ones whom have chosen this option. Best advice in avoiding this mistake is as a 1st time home buyer, for now, better to select a FHA loan program that provides you with a locked in interest rate for a locked in term. Once you get more seasoned then revisit this as an option to consider. Till then, best to go with what is a safer route and protect the home you’ve waited so long to have.
With each of the most common mistakes used by first time home buyers known, as a 1st home buyer, you can proceed safely and confidence in your efforts to avoid such mistakes as these.