Not Knowing Your Credit Score

The importance of your credit score in the mortgage process is super important. In most cases, this distinction will draw the line between owning a house and renting one.

Even if you have a near perfect sense of financial responsibility today, your credit past can come back to bite you. You will have a hard time getting a home loan if your recent record shows problems with on-time payments, or if there’s an error in your credit report.

It’s truly best to perform a credit check with your chosen lender before you move forward.

If you go ahead and apply for a mortgage without checking your credit score, you could end up doing a lot of searching for nothing and/or paying a lot more than you expected.

 

Not Obtaining Mortgage Pre-Qualification

Some people are anxious to shop for a house and want to do it quickly, before they are financially able to afford it.

If you have already started talking to sellers before sitting down with your mortgage lender, you are making a mistake. In fact, not many sellers will want to work with you if you promise them a certain amount and then can’t fulfill that promise.

To avoid any disappointments, it’s wise to have your home loan pre-approved first, then go ahead and look for a house to buy.

 

Failing to Budget for a Home Loan

As most people know, home ownership is almost always a cheaper alternative to renting in the long run. There are just so many benefits of owning a home, from historical appreciation to the tax benefits. With that said, in the beginning, it can be a bit pricier.

Therefore, it is important to budget for a home loan, beforehand. You need to determine whether your income can accommodate this expense or not.

If you find yourself unable to afford making monthly payments on your home loan, it would be a mistake to try to own a house at this time.

 

Overlooking the Home Resale Value

Remember, this home you are purchasing is considered an asset, and real estate has historically appreciated over time.

You should never overlook the resale value of the home you intend to purchase.

What you need to do is to ask yourself several questions such as: Will it be easy to sell this house? Might I be able to keep it and rent it if I want to upgrade later? Will this house appreciate over time if I decide to buy another one? Is it situated in a preferred neighborhood?

Settling on a Verbal Agreement

Many first time buyers can be a little too trusting. Just because you met the sellers and/or their agent and came to a verbal understanding does not mean a deal is in place. Misunderstandings are guaranteed to happen when agreements are made verbally.

With that said, make sure that you and the seller get everything down in writing to avoid future miscommunications and utilize a standard contract.

This way, you will have the legal high-ground should the seller fail to keep their word.

 

Indecision

As much as it is unwise to rush into making a purchase, it is equally imprudent to take too long to decide if a particular property is right for you.

If you take too long to make a decision, another homebuyer will take advantage of your indecisiveness and buy that home that you’ve had your eye on, but didn’t make an offer.

Since market trends change from time to time, you could also find out that the house you took too long to buy has a new (and higher) price tag attached to it.

 

Forgetting the Costs Associated with Owning a Home

Remember, a home requires money to maintain. Its important to know that upkeep and maintenance costs don’t end on the day you finish your last mortgage payment.

It’s important that you prepare for other costs for maintaining a safe, comfortable, and secure home.

Also, there are other ancillary costs to plan for – such as association fees, insurance, taxes, utilities, maintenance and major/minor repairs, etc.

 

So, If you can avoid these pitfalls commonly made by first-time buyers, the home buying journey will be much, much easier and enjoyable.  Don’t hesitate to reach out to me for help, as I’ve helped countless first time buyers navigate this process!

Photo Credit: Cafe Credit via Flickr, under the Creative Commons License