After finally saving up enough money to use as a down payment, I decided that it was time to hit the market. I met with a lender, got pre-approved for a loan, and then started visiting different properties. However, I quickly realized that I didn't know as much about real estate as I would have hoped. I wanted to find a great neighborhood and know what to ask the professionals, but I could tell that I needed a little help. To point me in the right direction, I started working with a great real estate agent who was familiar with the area. This blog is all about educating the general public on real estate matters.
If you're a first-time home buyer, you may find yourself overwhelmed by the process. Fortunately, there are a number of mistakes you can avoid with the help of a seasoned real estate agent and financial planner. Below are three such examples of mistakes that can be easily avoided with careful planning.
1. Taking Out the Full Loan Amount Offered by the Bank
You may be surprised to find that the bank has approved you for a larger loan than you originally thought, but taking out the full loan amount offered by the bank can be a huge financial mistake.
When determining your maximum loan amount, the lender will consider your income as well as any debts that you have listed on your credit report, such as credit cards and car loans. Consider, however, that mortgage lenders do not consider other payments you may have on a regular basis, such as health insurance or your child's school tuition payments. This means that mortgage lenders may not know exactly what you can afford simply because they're only looking at certain debts.
2. Using All Savings Towards a Down Payment
It may be tempting to put as much down on your house as possible, but using all of your savings towards the down payment can leave you scrambling when you need to make major repairs or when other emergencies pop up.
To determine how much you should keep in your savings account, consider how much you'll need for 3 – 6 months of living expenses. These living expenses should include your expected mortgage payment, as well as property taxes and a monthly allotment for small, unexpected repairs. If you find yourself dipping into your emergency savings to pay your down payment, you may be buying too much house.
3. Skipping a Home Inspection
There are a lot of ways you can cut costs during the home buying process, but skipping a home inspection can be one of the worst ways to cut corners.
Hiring an independent home inspector before purchasing a home can help you to avoid any big costs in the future, such as the replacement of a roof or mold remediation. While it's normal for a home inspection to turn up small issues, you may be able to negotiate the costs of these repairs into the final closing price of the house. While the initial cost of a home inspection may seem costly, an inspection can save you money, time, and unnecessary worry.
To learn more about the home-buying process and how you can avoid mistakes like the ones listed above, consult with your real estate agent and enlist the help of a financial planner who can help you to come up with a realistic budget.
For real estate agency help, contact a company such as Realty One Group.Share