Buying a Home Soon? 6 Pitfalls you should watch out for!
Securing a mortgage involves many vital details you ought to be careful about because they will have a significant effect on your life. A 1% difference in your mortgage rate, for example, can have a huge impact on your finances, since you’d be paying for many years! The purchase of a home is also likely going to be the highest investment you’d ever make. So, it’s really a big deal.
Since this is your first time, the likelihood of making a mistake is high, and that’s why we’d like to help.
Below, you’d find 6 common mistakes that most first-time home owners make.
1. The Credit Score
Your credit score is one of the most vital metrics that lenders consider. So, one of the mistakes you could make is to rush ahead, without ensuring that your score is attractive. Take adequate time to raise your score significantly before applying. Your score says a lot about you. It would either attract lenders to you or scare them away. It’s wise to do a bit of research on the “ideal” scores for the kind of mortgage you’re seeking and to devote some time to raising your score if it’s too low.
2. Hidden Costs
Without doubt, buying a home is one of life’s greatest achievements, and highest investments. And, as you approach its attainment you may be overly emotional. This can be costly down the line! In addition to your mortgage payments, it’s smart to take into consideration other costs, such as maintenance, taxation, and the insurance premium, before you make a decision.
3. A Loan that’s too Big
Let’s assume that you have a great credit score and you’ve met all other criteria, there may be a temptation to buy a really expensive home, which implies that you might be considering taking up a huge loan. Don’t! Consider that you’d be paying this amount for years to come, and you have other vital expenses, too. It’s smart to look at how the mortgage will impact your finances, as a whole, so that you don’t have regrets in the future.
4. Not Understanding the Contracts
Let’s be honest, most of us hardly study contracts. And, this is a huge mistake. It’s also a mistake you’re likely to make when you’re about to buy a home for the first time. Don’t allow yourself to be rushed. Take your time to engage a seasoned lawyer and carefully go over the contract. Pay attention to the fine print. You know you’re obligated once you sign the agreement, so, you cannot be too careful.
5. Use of Payday Loans
Payday loans offer immense relief and are getting highly popular. But, they are a red flag to most lenders. They suggest someone who is not on top of their finances! They reflect the sad truth that the person cannot even make it till pay day. If you’re fond of these loans, you’d need to stop using them if you want your application to sail through easily.
6. Inadequate Research
One of the major and common pitfalls you want to avoid is not doing adequate research. It’s vital to take time to comparison shop and to take into consideration all relevant factors. Many people are too much in a hurry. They are too emotional about the purchase, so, they rush, and hurt themselves financially. Fortunately, you can do most of your research online, and by talking to agents, attorneys, and to friends and colleagues who have their own homes.
Michael Newman