Before you purchase your first home, there are many decisions that you must make. These decisions are not only exciting, but they can also be downright scary at times. It is very easy to get caught up in the excitement that surrounds buying a new home, and unfortunately, this is the window of time during the process where mistakes can be made.
If you have decided that you are ready to buy a home for the first time, or you are ready to purchase another home, having the right knowledge will save you a lot of stress and anxiety later on. Here are some of the most common mistakes that are made by first time home buyers, and how to avoid making these mistakes when you are on the hunt for a new place to call home.
House Hunting Before Meeting A Mortgage Lender
We have all been guilty of it. We take a weekend stroll and drive through different neighborhoods to see if there are any houses for sale. However, this is one of the biggest mistakes that home buyers make.
You should never start viewing homes and attending open houses before you speak with a mortgage lender.
In larger markets, the housing market is very competitive and fierce. This means that you may find that you are in a position where you have to stretch your budget in order to get a home that you want because you did not get pre-approved for a loan first.
What you should do before you fall in love with your dream home is to make sure you have pre-approval first. By making sure you are pre-approved will show the lender that you are serious about purchasing a home.
Not Being Careful With Your Credit
During the preapproval process, mortgage lenders do pull credit reports. They do this to make sure that everything checks out before you even start looking for a house to buy. Lenders also complete a preapproval before the loan closes. This is done to ensure that nothing has changed with your credit during the home buying process.
Opening new credit card accounts or applying for new loans during the home buying process can jeopardize your closing. This is one lesson that first time home buyers typically learn about the hard way.
Your credit goals should be to keep your finances and credit the same from pre-approval to the closing. So, what does this mean? Do not open new credit card accounts, make large purchases on existing accounts or apply for new loans. Also, pay all bills on time and try to pay your existing balances down below 20 percent of the credit limit you have available.
Buying a home for the first time can be very overwhelming. Fortunately, this process can be streamlined and less complex by avoiding mistakes that can cost you the house of your dreams.