House Buying for Beginners: Common Questions and Mistakes
Are you a first-time house buyer? The home-buying process can be a complicated one, especially when you don’t have experience or know what to expect. For this reason, it’s important to know the answers to the most asked questions by home buyers.
It’s also important to know what mistakes to avoid when house buying as well. When you combine your knowledge of both topics, you can move forward in the home-buying process with confidence.
To learn everything there is to know for first-time home buyers, continue reading below!
Common Questions and Answers
If you’ve never purchased a home before, then you most likely have a variety of questions about the process. There’s nothing wrong with having questions! The most important thing is asking all questions and learning the answers to them.
Here are a few common questions first-time home buyers ask and the answers.
What Mortgage Can I Afford?
To get a better understanding of what you can afford, start looking at your personal finances. You’ll want to consider your income, monthly expenses, and any debt you have. After taking these into consideration, how much are you left with for your mortgage payments each month?
If you need help determining how much you can afford, then don’t hesitate to sit down with a financial advisor at your bank who can help run the numbers for you.
How Much Are the Property Taxes?
Don’t forget to factor in the cost of property taxes as well. Before purchasing a home, you can find out the estimated property tax. There might also be rate increases, so be sure to do your research on the property and the neighborhood.
For more information on the subject, be sure to ask your realtor. The best real estate agent will have the experience needed to give you the best answer.
How Much Is the Downpayment?
The amount of money you put down on a house before purchasing it will affect how much money you need to borrow. For this reason, it’s always best to save up as much money as you can before applying for a mortgage. If you can put down at least 20% of the home’s cost, then you won’t be required to purchase mortgage insurance.
Keep in mind that a 20% downpayment is required. There are first-time home buyer programs that’ll work with you and allow you to put down as little as 3% in some situations.
What Are Closing Costs?
You won’t pay the closing costs until the end of the transaction. These fees vary and may include your realtor fees, title search, home inspection, appraisal, home warranty, and more. Keep in mind that these fees can quickly add up so it’s important to start planning for them as soon as possible.
Are There Any Hidden Costs?
Remember that when purchasing a home, you take on all it’s responsibilities. These include general maintenance/upkeep and all repairs. Your lawn will need to be maintained, and you might need to purchase equipment like a lawnmower, snowblower, showerheads, and more.
If the home is a part of a Homeowner’s Association (HOA), then you’ll need to consider monthly HOA fees as well.
Common Mistakes to Avoid
There are a few common mistakes that first-time home buyers should be sure to avoid. The best way to avoid these mistakes is to know what they are and then take the necessary steps to ensure you go about the process correctly.
Here’s what you need to know.
Not Applying for a Mortgage First
Before you starting viewing homes online, apply for a mortgage. Speaking with different lenders will give you a better idea of what you can afford. Then, once you find a good lender and are preapproved for a mortgage, that’s when you can start looking at homes.
Now you know exactly what you can afford and won’t waste your time looking at homes or falling in love with homes outside of your budget.
Speaking With Only One Lender
Don’t simply go with the first lender/bank that you speak with. Shop around. Do your research.
Know what all the different lenders are offering at the present moment. Compare loan terms, rates, and lender fees to help you find the best option. Different lenders might also offer incentives during certain times of the year as well.
Draining Your Savings Account
It can be tempting to empty out your entire savings to pay for the downpayment or closing costs. However, this is another mistake to avoid because you’ll be left with absolutely no savings. Instead put down a smaller downpayment and purchase your mortgage insurance.
It’s the lesser of the two evils because you need to have at least 3 months worth of savings in case of an emergency,
Purchasing More Than You Can Afford
Always try to stick as close to your budget when purchasing a home. Too often, homebuyers fall in love with a home outside of their budget and end up overextending themselves. When you make a move like this, you’ll have less money left over each monthfor other bills and expenses.
It also puts you at a greater risk for foreclosure if you were to ever find yourself facing financial difficulties.
Not Researching the Neighborhood
Before you fall in love with a home, be sure to fall in love with the neighborhood first. This is especially true for those moving into areas they’re not familiar with. You may find a home withing your budget that meets all you’re expectations, but if it seems too good to be true, then there might be a reason why.
Always pay close attention to the area the home is located in. Do your research, because the last thing you want is to purchase a home in a neighborhood where you don’t feel comfortable or safe.
When Preparing for House Buying, Use These Tips
Are you ready to purchase your first home? The process of house buying isn’t always a simple one, but when you have these amazing tips and advice in your back pocket, you can begin the process with much more confidence.
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