A lot of first time home buyers have no idea what they’re doing when they stumble across this unfamiliar terrain and have been known to make some regrettable decisions in the process. Sure, some can get some good advice from family & friends that have been through the process before. It just might not always be the most accurate or up to date advice. In this post, we’ll go over some common mistakes a lot of first time home buyers make, and hopefully, by going over them, you’ll be able to avoid them too.
avoid these common mistakes
Looking for a home before getting pre-approved: I know, I know. It’s so exciting to start house hunting. Seeing all the pretty homes out there gets you excited to move in and start your life. Doing that might be a very bad idea though. If you’re looking for homes way out of your price range, you could get attached & set yourself up for some emotional disappointment. Do yourself a favor and go get pre-approved from a Mortgage Lender so you know what your price range is, then go shopping!
Not checking the first time homebuyer programs: Contrary to popular belief, you don’t have to save a ton of money when you’re buying your first home. Many Utah housing down payment assistance programs will help you to make a better choice and save more. Just ask your mortgage lender and they will guide you in the right direction of which ones are going to be most beneficial for you.Buying a more expensive home than you can afford: We easily fall in love with beautiful homes that always makes us want to stretch our budget. But that stretch can lead to tough financial times. I know a bigger, nicer home is more enticing, but try to be responsible and do what’s going to be best for your family. I promise it’s not worth the risk. You may even find a smaller similar version to what you’re wanting if you keep the search up!
Rushing into a Home: A lot of young couples are eager to buy a home shortly after they get married, and I can’t say I blame them. It’s an exciting time for sure. Usually, young couples aren’t always financially prepared for the burden of home ownership though. Even though many great programs offer zero percent down options, I’d still recommend taking some time to save up enough to put down at least a small down payment, or to cover closing costs.
Being Careless with Credit: The first thing your Mortgage lender will check is your Credit Report. If you’ve ever gotten any kind of loan before, you should know this. You don’t have to go overboard and count every dollar. Just try to do your best & pay your credit card bills from time to time.
Overlooking USDA, VA, and FHA loans: Being a first-time buyer can be complicated, and choosing the right loan can be difficult. Each type follows a different set of qualifications to get, so it can be really hard to narrow down what the best option for your family is going to be. To help you be sure, there are about three major types of loan programs, specifically designed with first-time home buyers in mind, that’ll make your life a little easier:
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- FHA Loans: Backed by the Federal Housing Administration, this loan allows home buyers to own a property with as little as 3.5% as the down payment. The loan is an excellent choice for people with a high debt to income ratio, or with a credit score that’s less than perfect.
- VA Loans: VA loans are eligible for active-duty and retired veteran military members and their surviving spouses. This loan offers a low down payment and lenient credit scores.
- USDA Loans: The USDA home loan is also referred to as the Rural Housing Loan. As the name depicts, the USDA home loan is available to those willing to purchase a property in suburban neighborhoods.
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The objective of the USDA home loan is to reach the low to moderate-income homebuyers by providing a mortgage at 0% down.
Draining Your Savings: Probably one of the worst things you can do is saving all your money to put 20% down and being left with nothing when it comes time to buy. I understand wanting to avoid mortgage insurance seems like a priority, but you’re doing yourself no favors if you end up needing that money later on down the road. Ask your Loan officer what they would advise you to do with how much you have saved up. They see this kind of scenario all the time and should be able to give you sound advice.
Missing the First Mortgage Payment: Some homeowners skip their first monthly payment trying to play catch up from just buying their house. Some thought that it will auto-deducted but it doesn’t always deduct automatically. That small mistake can lead to bigger problems later on in the future & might get you in this never-ending cycle of playing catch up. Be sure about the payment and understand your mortgage lender when it comes time to close your loan. They wouldn’t let you get yourself into a loan you could afford to pay, so have trust & make sure you put aside the right amount.
I hope you can learn from the mistakes of others, so you can avoid some of the heartbreak others have had to endure. Remember, the first step is finding a good Lender to help you figure out your price range so you can get to house hunting! Sun American Mortgage has you covered no matter what your financial standing may be. Our friendly loan officer would be happy to answer any questions you might have and run through scenarios with you to make sure you get into your dream home without breaking your wallet!
