Buying your first home can be exciting, but not knowing enough about the buying process can be your downfall. It can even cost you the home of your dreams. Before you fall in love with that little house on the corner lot with the white picket fence, take the time to learn more about the home buying process.
Buyers Should Be Pre-Qualified Before House Hunting
The last thing you want to do is go house hunting without first being pre-qualified for a loan. When you’re pre-qualified, there’s no question about whether or not you’ll be able to purchase the home of your dreams or how much home you can afford. Not to mention that in a competitive market, you could lose a home waiting to get qualified.
It’s Up to the Seller to Pay the Real Estate Agent
You do not have to pay a real estate agent a fee. The real estate agent earns a commission from the seller once the house is sold. Don’t be afraid to reach out to an agent. An agent can find you the best homes that match your wants, needs, and budget.
Interest Rates Go Up and Down
Don’t be discouraged if interest rates are too high. According to lendingexpertblog.com, Interest rates rise and fall. However, anything below 5% is an excellent interest rate and should allow you to get a home loan you can afford.
You Will Never Be Punished for Early Pay-Off
A huge mistake first-time buyers make is to push themselves too far when it comes to payments. If you qualify for a 30 year fixed rate loan and the payments are $800 a month, but you “think” you can afford $1600, don’t jump at the 15-year mortgage. Remember, you can always pay more each month, but you can’t pay less.
A 20% Down Payment Isn’t Always Necessary
It’s extremely rare to come across an 80/20 loan in today’s economy. However, that doesn’t mean you have to pay 20% down. In many cases, you can pay 5% down or less. There are a number of programs to look into. Two of the most popular are the FHA and USDA home loans.
Applying for Credit Can Hurt Your Chances
In the 6-month period leading up to your home search, you do not want to apply for any credit. This includes credit cards, auto loans, etc. Doing so can actually hurt your chances of getting a home loan because it can affect your debt to credit ratio.
An Inspection Can Prevent Big Mistakes
Last, but not least, before you sign on the dotted line, make sure you get a thorough home inspection. The last thing you want is to purchase a home and find out there are hidden problems. Even if a home is sold as-is, you need to be aware of what you’re getting into.
Home ownership is a wonderful thing, but you need to be an educated home buyer before making your first purchase. Don’t rush into this process or you could make mistakes that cost you the home of your dreams.