Buying a home is an overwhelming process. First-time homebuyers are prime targets for home buying and mortgage traps that can lead to problems later on. At First Fidelis LLC, our goal is to help first-time homebuyers avoid making these common mistakes.
1. Buying Too Much House
First-time homebuyers are notorious for purchasing too much house. This means that their mortgage payment, property taxes, and homeowners insurance exceed 30 percent of take-home pay for the household. It is important to keep all of this in mind when you look at how much you can spend on a home.
If you purchase a house that is over that 30 percent threshold, you risk getting behind on housing costs, emergency fund savings accounts, or other major bills.
Additionally, maintaining a home can be both expensive and time-consuming. If you don’t have the time or ability to complete repairs, clean, or mow the lawn, you will need to hire someone to do those things for you, and the price tag on these tasks isn’t cheap.
2. Not Preparing in Advance
Houses are an expensive investment. The first thing that anyone who wants to purchase a home should do is start saving early. Give yourself plenty of time to build up a substantial down payment and improving your credit score if necessary. Make sure that you have stable jobs and an emergency fund.
Before you start searching, it is a good idea to start looking into different mortgage lenders in your area. Get preapproved for a mortgage loan to prevent missing out on your dream home. As you search for a mortgage lender, ask a lot of questions. You want to make sure that you are getting a low-interest rate as well as working with a lender that meets all of your other needs.
3. Not Researching the Local Market
Home prices vary dramatically from state-to-state and even city-to-city. A home in a rural area is going to cost significantly less than the exact same home in a large metropolitan area. To make sure that you aren’t overpaying for a home, you need to know a lot about the local housing market.
The Internet is full of information but be sure that you aren’t looking at regional or national figures, which won’t help you. When you work with a real estate professional, they can help you determine fair prices in the area you are interested in.
4. Accepting Your First Mortgage Offer
Applying for a mortgage is a hassle, but you will benefit from applying for numerous mortgages because you want to make sure that you have the best possible rate. Accepting the first offer won’t allow you to shop around for the best possible interest rate. If you have good credit, this is especially important. Even a fraction of a percentage point could help you save thousands over the course of your home loan.
5. Not Fully Understanding the HOA
Homeowners associations are common—especially in newer communities. HOAs have two primary purposes. The first is to help pay for community amenities and upkeep. The second is to put rules in place for the community.
Your dues will cover the community amenities and upkeep fees. Some HOA fees are high, and you should be aware of them before you buy a house.
The rules that HOAs put in place might be very restrictive. Some HOAs dictate colors you can paint your home, where you can park, and if you can have pets on your property.
Don’t just ask what the HOA fees are, be sure to get a copy of the rule book so that you can see what you are expected to follow should you purchase that home.
6. Not Working with the Right Lender
Not all lenders are created equally. When you are trying to work with a lender, you need to be prepared to ask good questions. This means that you need to know what you are looking for before going into the home buying process. Here are a few common questions you might want to ask a lender or mortgage broker:
- What documents do I need to get a loan?
- Which types of loans are best suited for me and my needs?
- Do you approve loans in-house?
- What kind of down payment will I need to get a loan from you?
- Are there special programs available to me?
- Do you charge an origination fee?
- What other lender fees do you charge?
- What interest rate will I pay, and what is the APR?
- How do you calculate adjustments to your adjustable-rate mortgages?
- How does your rate lock policy work?
- Do you charge an early repayment penalty?
- Can I get pre-approved for the loan?
- What should I avoid doing to preserve my pre-approval?
- How likely do you think I am to get the loan I want?
- What will my monthly mortgage payment be?
- How much time will it take to receive the loan?
- What are my closing costs?
- Do you guarantee on-time closings?
- Do you have references?
Use only trusted real estate agents and lenders to ensure that you aren’t going to get suckered into a bad purchase. If you are looking for a trustworthy and reliable mortgage broker, First Fidelis LLC is here to help you secure a mortgage loan for your upcoming home purchase.
You can reach First Fidelis LLC at 816-205-9978.