bradschmett|July 6, 2020
Everyone knows that purchasing a home is, more often than not, the largest investment the average person will make in their lifetime. Clearly then, there are plenty of good reasons to explore all the options and proceed with caution. Let us take a look at six of the biggest mistakes people make when they are in the market for their first home. Perhaps it will help you make the best possible decision for you and your family.
One of the first things a mortgage underwriter will take a look at is whether or not you can afford to make mortgage payments. Most reliable sources say that the largest amount of consumer debt in today’s market is in student loans followed by car payments. This means if you have purchased an expensive, new vehicle and have a substantial car payment you are less likely to be able to qualify for a home loan. Lenders like to see a low debt ratio so a car payment is often the straw that broke the camel’s back when it comes to getting a mortgage financed.
Try to pay off any auto loans before you attempt to purchase your first home.
Knowing all of the potential landmines that exist in your new home ahead of time can go a long way toward making sure you do not have any expensive and rude surprises after you move in. Do your homework and research up front and find out exactly what condition the property is in. Repairs in plumbing and electrical can run into thousands of dollars and be a major headache for new homeowner. Do not let that happen to you.
Of course it is smart to do plenty of research ahead of time, and the Internet is also a good source of information, but do not put all your eggs in one basket and assume that everything you find on the Internet is accurate or even truthful. Now is the time to consult with a reputable real estate professional. Let someone with years of experience and a good track record advise you and guide you.
In most cases the value of your home will go up rather than down but expecting too much is a typical downfall of new homeowners. Many assume that the value of their home will dramatically increase over the first few years although this is rarely the case. Remember that your mortgage payment for the first few years is largely interest and you will not see a big change in your principal for a while. Be patient and eventually your home will begin to accrue equity.
Before you start searching for a home, save as much as possible for a down payment and make sure your credit report is free of any inaccuracies or negative items. The more money you have to put down and the better your credit, the more competitive you will be when the time comes to make an offer.
Even if the home you find is your dream house and you have been searching for all of your life, the worst thing you can do is let the seller know that. Be professional and noncommittal, even though inside you may be very happy and excited. Remember, there is always another house if things do not work out with this one. So, put on your poker face and go shopping!