If you’re buying your first home, you might feel equal parts excited and stressed. After all, a home is one of the most expensive assets you’ll own. Luckily, you can avoid the most common mistakes first-time home buyers make. Read on to learn how to land your dream home without hitting too many bumps in the road.
Spending More Than You Can Afford
Setting your budget too high is one of the most common mistakes first-time home buyers make. It’s also the mistake with the most consequences. If you struggle to keep up with your mortgage, you might need to get a second job, find a roommate, or sell.
The key is to set a budget that fits with your current income. Ideally, your mortgage payment should be about one-third to half of your monthly income. Keep in mind that you’ll also need to budget for repairs, especially major ones like a new roof or furnace.
Forgetting To Research Mortgages
Before you start going to open houses, you should get preapproval for a loan. It’s also a good time to scope out mortgage interest rates. Make sure you meet with different lenders and compare rates and terms. Many first-time buyers don’t realize the value of comparison shopping.
Banks and lenders use your credit score to predict how financially responsible you’ll be. In fact, it directly impacts the mortgage interest rate that lenders will give you. The duration of your loan will also affect the interest. For example, a 30-year mortgage has a higher interest rate than a 15-year one because the bank must wait longer to get their money back.
Ignoring the Location of the House
While indoor home features like renovated kitchens and bathrooms are a great selling point, they shouldn’t be your prime focus. You also need to consider the location.
The neighborhood, school district, and accessibility of local parks and transportation are also factors in choosing the right home. After all, you can renovate a house, but you can’t change its location.
Buying a home is a complex process, so it’s normal to have questions. Do your due diligence and ask for guidance from other homeowners in your life. You’ll be unlocking the door to your own home before you know it.