Mistakes To Avoid As A First Time Home Buyer in Granville Ohio
Buying your first home comes with many big decisions, and it can be as scary as it is exciting. It’s easy to fall down the rabbit hole of home shopping and make mistakes that could leave you with buyer’s remorse later. Read on and follow my advice for first time home buyers.
If you are a First Time Home Buyer in Granville Ohio or it’s been many years since you last bought a home, knowledge is power. Along with knowing what issues to avoid, it’s important to glean First Time Home Buyer tips so you know what questions to ask as well as what you can expect. Here is some advice for first-time home buyers.
Waiting for the ‘ONE’
In Real Estate, unicorns do not exist. Finding the perfect property is similar to finding a needle in a haystack. You might pass over solid contenders in the hopes that something better will come along if you’re looking for perfection since it can narrow your choices too much. This type of thinking can sabotage your search.
How this affects you: It can also take longer to find a home if you’re looking for perfection as it might limit your real estate search.
What to do instead: Be willing to put in some sweat equity and keep an open mind about what’s on the market. Some loan programs let you roll the cost of repairs into your mortgage.
Moving Too Fast
Buying a home can be complex, particularly when you get into the weeds of the mortgage process. Rushing the process can cost you later on.
One of the biggest mistakes that I see First Time Home Buyers make is to not plan far enough ahead for their purchase.
How this affects you: You might be unable to save enough for a down payment and closing costs, address items on your credit report or make informed decisions if you’re rushing the process.
What to do instead: Map out your First Time Home Buyer timeline at least a year in advance. It’s important to note that it can take months, even years, to save enough for a sizable down payment and repair poor credit. Work on boosting your credit score, paying down debt and saving more money to put you in a stronger position to get pre-approved.
Emotional Decision Making
Buying a house is a major life milestone. It’s a place where you’ll make memories, put down roots, and create a space that’s truly yours. Remember that you’re making one of the largest investments of your life. It’s really easy to get too attached and make emotional decisions.
How this affects you: Emotional decisions could lead to stretching your budget beyond your means, in turn, overpaying for a home.
What to do instead: Don’t become emotionally attached to a home that is not yours. Have a budget and stick to it.
Buying more than you can afford
Tying into the last point, it’s easy to fall in love with homes that might stretch your budget, but overextending yourself is never a good idea. With home prices still rising, this is a lot easier said than done.
How this affects you: You’ll also have less wiggle room in your monthly budget for other bills and expenses if you’re buying a home that exceeds your budget. This can put you at higher risk of losing your home if you fall on tough financial times.
What to do instead: Just because you can qualify for a $300,000 loan, doesn’t mean you can afford the monthly payments that come with it. Focus on what monthly payment you can afford rather than fixating on the maximum loan amount you qualify for. Factor in your other obligations that don’t show on a credit report when determining how much house you can afford.
Lenders pull credit reports at pre-approval to make sure things check out as well as just before closing, making sure nothing has changed in your financial picture.
How this affects you: Any new loans or credit card accounts on your credit report can jeopardize the closing and final loan approval. Buyers, especially first-timers, often learn this lesson the hard way.
What to do instead: Keep the status quo in your finances from pre-approval to closing. Don’t open new credit cards, take out new loans or make large purchases on existing credit accounts in the months leading up to applying for a mortgage through closing day, or close existing accounts. Pay your bills on time and in full every month and pay down your existing balances to below 30 percent of your available credit limit.
Focusing more attention on the house over the neighborhood
Being nit picky about a home’s cosmetics can be short-sighted if you wind up in a neighborhood you hate. Sure, you want a home that checks off the items on your wish list and meets your needs, but make sure you like the area as well.
Selecting the right town is critical to your life and family development. The goal is to find you and your family a place where the culture and values of the area match yours. You can always trade up or down for a new home; add a third bathroom or renovate a basement.
How this affects you: You could wind up loving your home but hating your neighborhood.
What to do instead: Ask your real estate agent to help you track down neighborhood crime stats and school ratings. Measure the drive from the neighborhood to your job to gauge commuting time and proximity to public transportation. Visit the neighborhood at different times to get a sense of traffic, neighbor interactions and the overall vibe to see if it’s an area that appeals to you.
Draining your savings
One of the biggest First Time Home Buyer mistakes is spending all or most of their savings on the down payment and closing costs.
Some people scrape all their money together to make the 20 percent down payment so they don’t have to pay for mortgage insurance, but they are picking the wrong poison because they are left with no savings at all.
How this affects you: First Time Home Buyers who put 20 percent or more down don’t have to pay for mortgage insurance when getting a conventional mortgage. That’s usually translated into substantial savings on the monthly mortgage payment. That doesn’t mean it’s worth the risk of living on the edge.
What to do instead: Aim to have three to six months of living expenses in an emergency fund. Depleting your emergency or retirement savings to make a large down payment is riskier than paying mortgage insurance even though it isn’t ideal.
not applying for a mortgage before Looking for a home
Many first-time buyers make the mistake of viewing homes before ever getting in front of a mortgage lender. In some markets, housing inventory is still tight because there’s more buyer demand than affordable homes on the market. You could lose a property if you aren’t pre-approved for a mortgage in a competitive market.
How this affects you: You might get behind the ball if a home hits the market you love. You also might look at homes that, realistically, you can’t afford.
What to do instead: Be sure to get a fully underwritten pre-approval before you fall in love with that gorgeous dream house you’ve been eyeing. Being pre-approved sends the message that you’re a serious buyer whose credit and finances pass muster to successfully get a loan.
Talking to only one lender
This one is big. A First Time Home Buyer might potentially leave thousands of dollars on the table getting a mortgage from the first (and only) lender or bank they talk to.
A good mortgage loan officer can examine your situation and diagnose any potential hurdles ahead to give you a clear understanding of your home-buying options.
How this affects you: The more you look around, the better basis for comparison you’ll have to ensure you’re getting a good deal and the lowest rates possible.
What to do instead: Shop around with a mortgage broker and at least three different lenders. Compare rates, loan terms, and lender fees. Both lender responsiveness and customer service play key roles in making the mortgage approval process run smoothly; don’t discount them.
Contact me for more advice for first time home buyers in Granville, Ohio
If you have any more questions for advice for First Time Home Buyers in Granville Ohio, contact me or give me a call and let’s discuss your options.