Home Buying Mistakes To Avoid By First Time Home Buyers
This ARTICLE On Home Buying Mistakes To Avoid By First Time Home Buyers Was PUBLISHED On September 1st , 2019
Gustan Cho Associates Mortgage Group have numerous different loan options available without LENDER OVERLAYS.
- The vast array of mortgage options can sometimes be overwhelming for some clients
- That is where your loan officer comes in to play
- Our team has experienced loan officers who will provide the best long-term advice
- Many clients have made home buying mistakes in the past
In this blog, we will detail some of the financial mistakes clients make and how to avoid them.
Common Home Buying Mistakes By First Time Home Buyers
What are some common home buying mistakes?
BUYING TOO MUCH HOUSE:
- Buying a house out of your budget
- Just because you may qualify for a house based on debt to income guidelines, does not mean that is the house for you
- Maximum debt to income ratios and what you truly can afford are two different things
- While agencies such as FANNIE MAE, FREDDIE MAC, and HUD have put strict debt to income caps on their mortgage guidelines
- These caps do not always stop people from buying more home than they can afford
- Just because you can have a back-end debt to income ratio of 56.9% with an FHA mortgage, does not mean you need to stretch your budget that far
- Please see our blog on DEBT-TO-INCOME for more details
In the following paragraphs, we will cover and discuss common homebuyer mistakes by first-time homebuyers.
Avoid Potential Foreclosure Due To High Mortgage Payments
Thousands of Americans foreclose on their properties every single year.
- This is a statistic we like to change
- The loan officers at Gustan Cho Associates will not only go over your mortgage payment but also your monthly budget
- There are homeownership classes available to show you what you truly can afford
- See HUD’S WEBSITE for a list of homeownership counseling courses in your area
- Always keep in mind that unexpected expenses are part of owning a home
- Missing a mortgage payment will be a dagger to your credit score
- Remember while renting you have a landlord who is responsible for repairs when buying a house that burden falls on you
- If a mortgage payment is higher than the rental payment you are used to making, it will be more important than ever to start budgeting for repairs
Usually, a deductible on homeowners’ insurance is a minimum of $1000. A safety savings account is a good idea!
Skipping Home Inspection Is Common Home Buying Mistakes
SKIPPING A HOME INSPECTION
Another mistake we have seen is clients who do not complete a home inspection.
- When signing a real estate purchase agreement, there is usually an inspection period for the first week or 10 days
- During this timeframe, the buyer may schedule a home inspection
- The seller will leave the property so the home inspector can come to take a look
- This inspector will go into much more detail compared to the appraiser
- A lender only requires an appraisal, not a home inspection
- However, you are buying a long-term asset and spending a few hundred dollars upfront will protect you in the long run
- The inspector will test every faucet, every power outlet, every light bulb, all major appliances, foundation, and even the roof
- If you are in the process of saving for a house, we recommend watching the movie the money pit
- While this is over-exaggerated, events like this have happened
- Once you receive the home inspection report, you will have the ability to re-negotiate with the seller
- They may have something small that they need to fix prior to the appraisal, such as peeling or chipping paint
- Or there may be a major mechanical issue such as the hot water heater on the fritz
At this point, you may ask the seller to repair the hot water heater offers you a seller credit to pay for it when you buy the house. Either way, this is a great negotiation tool for the transaction
Please read our article on HOME INSPECTIONS for more on this topic.
Home Buying Mistakes In Buying In The Wrong Neighborhood And Area
BUYING IN THE WRONG AREA
“Location, location, location”.
- We have all heard this term when describing real estate
- It is important to love the surrounding area of your home as well as the home itself
- I have had clients call me after only living in their home for about a year saying they need to move because they can’t stand their busy street
- If you are planning to start a family or already have kids, it is important to buy a house in an area where the kids will be safe
- A busy street is always dangerous
- Kids love to play outside and ride bikes, doing this along a busy street is dangerous
- Or you may be near a loud RAILROAD TRACKS
This can affect sleep patterns over time.
Research Neighborhood And Surrounding Areas
When viewing potential homes to buy, the excitement inside the house can distract you from the surrounding areas:
- Keep in mind this is a long-term investment
- No two homes are the same and each location will have different surroundings
- Public parks and close by recreation areas also increase property values
- It is important to factor in how far you are from different schools, public transportation, and highways
- This will drive your long-term property value up or down
- It is not uncommon to talk to the neighbors when viewing a home
They can tell you about the area from the first-hand experience and if you decide to buy that house, well they’ll be your neighbor anyway!
The Home Buying And Mortgage Process Does Not Need To Be Stressful
Buying a home does not need to be stressful. The home buying and mortgage process should be a rewarding process.
- Gustan Cho Associates are here to guide you through the process
- From start to finish, we will be there for every step
- Our highly-skilled loan officers have seen many different mortgage scenarios and will come up with a customized plan for you
- Do not be intimidated by the vast array of mortgage products offered, we will walk you through all of your options
- 75% of our clients have been turned down or lead down the wrong path with another lender
- Please call us directly on 630-659-7644 for a one-on-one consultation
We are direct mortgage lenders without LENDER OVERLAYS, and are able to help more borrowers than most lenders! Feel free to call anytime, we are here seven days a week.