Looking for a house is an exciting time. I'm here to make sure your dreams can be realized!
Here is a list of costly mistakes many first-time home buyers will make; but not you.
The Newbie: Looks at homes before meeting with a mortgage lender. They don't have money lined up when finally find that perfect home. They wind up unable to put in offer in on time!
The Pro: Gets a fully underwritten preapproval so they can put in a solid offer. They strike while the iron is hot.
The Newbie: Goes to the first bank or lender they come across. Potentially over pays thousands on their mortgage
The Pro: Shops around with at least three different lenders. They compare rates, fees, terms, customer service and responsiveness.
The Newbie: Rushes into home buying the process without saving enough for a down-payment and closing costs.
The Pro: Prepares for at least a year before purchasing a home. During this time they fix their credit, pay off their debt, and saves as much as possible for their down-payment.
The Newbie: Falls in love with a house at the tippy top of their price point. They overextend their budget, have less room in their budget for bills and expenses, putting them at risk of foreclosure
The Pro: Focuses on what monthly payments they can make and not the maximum loan they are eligible for. Just because they are able to buy a house at the top of their loan amount doesn't mean they will.
The Newbie: Spends all of their money they have saved up for their down-payment and closing costs leaving nothing in their emergency fund.
The Pro: Keeps at least a three months emergency fund set aside despite contributing less to their down payment and having to pay mortgage insurance. The pro knows that once they have 20% equity in the home, the mortgage insurance will be canceled.
The Newbie: Applies for a new credit card thinking that once they close on the home they will go furniture shopping with their new line of credit. The lender sees this change to the newbie's credit report and pulls the loan approval.
The Pro: Doesn't open any new credit cards, doesn't close any existing accounts, doesn't take out new loans or make any large purchases (such as furniture) in the months leading up to applying for a mortgage. They continue to pay bills on time and pay down the existing balance on their credit limit to below 30 percent.
The Newbie: Fixates on the home itself and ignores its environment its in. They end up hating their neighborhood and eventually their home.
The Pro: Leverages their real estate agent's local knowledge into finding a neighborhood that suites them. They visit the neighborhood before putting an offer in on the house. They look for lifestyle first and home second, knowing they can always renovate to suite their tastes.
The Newbie: Lets emotion decision lead to overpaying for a home.
The Pro: Knows this is the largest investment of their life so they stick to their budget and don't become emotionally attached to a home they don't own.
The Newbie: Delays purchasing a home because they want to save up the 20% for a down-payment. They forgo maximizing their retirement savings, adding of their emergency fund or paying off high-interest debt.
The Pro: knows that they can buy a home for as little as 3 or 0 percent down. First-time home buyers only put down 6% on average. They know that private mortgage insurance is temporary and housing appreciation will allow them to reach 20% equity quickly.
The Newbie: looks for their perfect-move in house. They limit their search, end up overpaying and spend a long time looking while interest rates keep rising.
The Pro: Keeps and open mind and is willing to put in some sweat equity. They use a 203(k) loan to help pay for repairs and roll these costs into their mortgage.
The Newbie: lost their earnest money because they were unable to secure their promised gift money after having put an offer on a house and resulting in their mortgage being denied
The Pro: Has pre-arranged the gift money so it's already in their bank account before putting an offer on their house.
The Newbie: Assumes as long as the principal and interest are covered, they can afford the home at the top end of their budget.
The Pro: Knows that property taxes, mortgage insurance, homeowners insurance can add up to between $500 and $1000 per month for a $500,000 home in additional costs. They also budget to set aside an additional $2000 per year for repairs and maintenance.
Looking for a house is an exciting time. I'm here to make sure your dreams can be realized!
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