Sarah Wu The Mortgage Expert,
Publish On: June 26, 2023
This guide covers home-buying mistakes by first-time homebuyers. Gustan Cho Associates Mortgage Group offers numerous loan options without LENDER OVERLAYS. The vast array of mortgage options can sometimes be overwhelming for some clients. That is where your loan officer comes into 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.
Common Home-Buying Mistakes By First-Time Homebuyers
What are some common home-buying mistakes? Buying a house out of your budget. Just because you may qualify for a house based on debt-to-income guidelines does not mean it 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 homes 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 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 review your mortgage payment and 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 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
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 ten 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, the foundation, and even the roof.
If you are saving for a house, we recommend watching the movie the money pit. While this is 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 to fix before the appraisal, such as peeling or chipping paint. Or there may be a major mechanical issue, such as the water heater on the fritz. You may ask the seller to repair the water heater and offer a seller credit 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 and 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 streets. If you are planning to start a family or already have kids, buying a house in an area where the kids will be safe is important. 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 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 determine 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 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 devise a customized plan for you. Do not be intimidated by the vast array of mortgage products offered, we will walk you through all your options.
80% of our clients have been turned down or led down the wrong path with another lender. Please call us at 800-900-8569 or text us for a faster response for a one-on-one consultation. Or email us at gcho@gustancho.com. We are mortgage lenders without LENDER OVERLAYS and can help more borrowers than most lenders! Feel free to call anytime, we are here seven days a week.
