Top Mistakes People Make as First-Time Homebuyers

You’ve done the math and the logistical groundwork – you have proper savings, decided on the dream location, figured out the type of home you want, and are ready to invest.

But you’re still unable to find the perfect property that is big enough for you and your family and is within your budget?

A survey by Homes revealed that 40% of first-time homebuyers mentioned that buying a home was one of the most stressful events in their lives. It requires mental preparation, financial stability, and a professional’s insight into navigating the complex housing market.

If you’re planning on buying a home for the first time, here is a guide.

Read ahead to learn about the top mistakes people make as first-time homebuyers, according to real estate experts.

Beginning Your Home Search Before Applying for a Mortgage

Firstly, never begin the search for your home before consulting a mortgage lender. The housing inventory is tight in today’s competitive housing market because there is higher buyer demand and not enough affordable homes.

So, before you start eyeing properties that you like, get preapproved for a mortgage. This step will help you determine your purchase power and save you from the unnecessary disappointments that come with getting hopeful about houses that are outside your budget.

Getting pre-approved also shows real estate professionals that you are a serious buyer. Many realtors won’t take on clients if they don’t get preapproval for a mortgage. Getting pre-approved also lets your real estate agent show you homes with confidence, and there are decreased chances of your funding getting derailed when closing the deal.

Not Finding Out How Much You Can Afford

One of the biggest mistakes first-time homebuyers make is not determining their budget.

Your goal, as a first-time home buyer, should be to find a property and get a loan that allows you to comfortably make monthly payments.

Another important thing to remember is to have a balance between your savings and debt. Focus on how many monthly payments you can afford and be completely honest with your broker about your finances. You don’t want to be stuck repaying your loan and have bills you cannot afford.

Sticking to One Lender

As a first-time homebuyer, you should not immediately start working with the first lender or bank you talk to. You need to be able to compare offers and make sure that you’re getting the best deal with the lowest possible rates.

We would recommend shopping around and working with three different lenders and a mortgage broker before you make your final decision. You should get the rate quotes from different lenders on the same day because rates can change from time to time. Compare rates, loan terms, lender fees, and customer service.

Not Determining the Down Payment

As first-time homebuyers, you should determine your down payment because you don’t want to make a down payment that’s too small.

The amount of down payment you’ll have depends on the type of mortgage you’re getting. Typically, the mortgage down payment can range from 3.5% to 20%.

The higher your down payment goes, the lower the risk you become for a lender. If you put down a down payment of less than 20%, lenders will charge you for private mortgage insurance (PMI) which is a safety policy that safeguards the lender in case you default on your home loan.

You should consult with a professional to find out which loans require a PMI and the amount of down payment you must pay to avoid being stuck with this insurance.

Being Careless with Your Credit Report

Your credit report has details of any new loans and credit card accounts that can jeopardize your final loan approval. A mortgage lender will observe your credit report when you’re getting your pre-approval to check if you are eligible for a loan.

Make sure that you don’t open any new credit cards from your preapproval to closing. Be careful not to make any large purchases on your existing cards, take out a new loan, or close existing accounts during this time as well.

Check your credit before you begin your home search because the higher your credit score is, the lower the interest rate you’ll receive on your mortgage.

You can boost your credit score by:

• Increasing your card limit – you can get in touch with your credit card company and request a card limit increase.
• Pay your credit card debt – your credit score will rise if you pay down your credit card debt.
• Use credit monitoring – credit monitoring services will help you track your credit score progress.

Prioritizing the House Over the Neighborhood

Sure, you want a house with just the kind of architectural elements that you require, but if you’re too fixated on the house, you might end up in the wrong kind of neighborhood.

Selecting the right neighborhood is just as important as selecting the right house. First-time homebuyers should ensure that they find a place that has the same values and culture as them. You can always make cosmetic changes or renovations around your house later, the first task should always be to find the right town.

Work with a real estate professional and research the area you select to move into.

Looking for qualified and professional real estate agents in Palmdale? Your search ends here.

Team Zotti provides some of the best real estate services in Lancaster and Palmdale. They have an in-depth understanding of the housing market and can help you achieve all of your real estate goals. Their team of realtors has over thirty years of experience working in the real estate industry and is committed to providing top-notch services.

They will work with you through every step of the home-buying process and make sure that you have a stress-free experience.

Drop them a message today to learn more about their real estate services.