Pitfalls To Avoid when you are a first time homebuyer.
There is really no greater investment than a new home. Buying a first home should be a great moment as it is a huge accomplishment. There are however some tips that you should keep in mind to help make the often stressful process a bit easier.
Although you may have paid rent before, having a home and paying a mortgage is a different responsibility. There are more expenses involved with purchasing a first home compared to renting a property. These items should be taken into account before the new home search begins.
First time home buyer Pitfalls - Understand the new home owners responsibility vs. renting.
You don't want to overbuy just because the ratios/approval says you can afford the home. There are much more expenses in owing vs renting so you want to avoid payment shock. When renting you likely are not responsible for the upkeep of the property. The landlord would likely handle all those property related expenses. As a homeowner you are the landlord. So if you are currently renting and about to buy your first home you should remember that the expendable cash that you had as a renter may need to be saved for the expenses that you now have as a homeowner.
First time home buyer Pitfalls - Shopping for a home before you know what you can qualify to buy.
Window shopping is usually fun and when home shopping it can prove valuable to look around and get a general idea of the location and home type that meets your needs. Before stopping into any home for sale you need to get pre-qualified for a home loan and understand the requirements of any assistance or grant program you want to use. Pre-qualification will give you a good idea of the amount you can afford and if there are any items that need to be addressed before a loan can be approved.
If you are using a down payment assistance program you may be required to take a course and get a certificate before you can make an offer and get an accepted contract on a property.
First time home buyer Pitfalls - Moving cash around and making large purchases while in the home buying process.
Planning is critical when buying a first home. It is not when you make the application for a home loan or a contract to buy a home when everything really starts. A first time home buyer should be planning for months if not years ahead of beginning the search. When application is made for a loan the buyer will likely need to show 2 years of work history. The 2 years is something that can make the process smoother. Once in application it is critical to not make any large purchases, to not open any new credit lines (unless otherwise recommended by the lender or credit counselor), to not move cash around between accounts with out tracing the money flow. In addition, "mattress money" cannot be used. This is cash deposited that cannot be sourced. Make sure all your funds are in order and pull a consumer credit report to make sure there are no errors or issues before making a loan application and shopping for a home.