Buying a Home? Don't Make These Common First-Time Mistakes
Top rookie mistakes homebuyers (especially first-timers) should avoid.
Buying a home and getting a mortgage are fairly complex transactions that even seasoned buyers can mess up. So you can imagine how easy it is for first-time homebuyers to make rookie mistakes that cost time and money.
So our home-lending friends at LendingTree gave me the following top 3 mistakes that homebuyers (especially first-timers) should avoid:
Mistake #1: Shopping for a home before getting a home loan
Getting pre-qualified for a mortgage is a smart move. Not only does it tell you exactly how much home you can afford, it also helps narrow your search to properties in your price range. So being pre-qualified saves you time and tells your real estate agent that you’re not just a looker, but a serious homebuyer!
Another huge benefit of getting pre-qualified for a home loan comes when you make a purchase offer on your dream home. The seller will know that you have the means to buy their property and can close the sale quickly.
Depending on the seller’s circumstances, being able to close quickly could be a big advantage. They may accept your offer instead of a higher one that would take longer to close.
Mistake #2: Ignoring first-time homebuyer programs
There are many great programs for first-time homebuyers that may include mortgage interest subsidies or down payment assistance. But did you know that even if you owned a home in the past, you may still be eligible?
Many first-time homebuyer programs define a first-timer as someone who has not owned real estate in the past 3 years. So be sure to investigate and ask your mortgage lender how these programs could save you money, even if you owned a home in the past.
The U.S. Department of Housing and Urban Development or HUD has a list of first-time homebuyer programs sponsored by states, local governments, and organizations that can help you.
Mistake #3: Considering only a 30-year fixed-rate loan
While it's true that 30-year fixed-rate mortgages are still near historic lows, they may not always be the best choice for first-time homebuyers.
If you believe that your family will grow or that you’ll earn more in a few years and may want to buy a larger home, consider getting an adjustable-rate mortgage (ARM) instead of a fixed-rate mortgage.
With an ARM you get a lower introductory rate and lower monthly payments, which can save you money in the short term. Having lower monthly payments may allow you to qualify for a larger loan and buy more home than you could get with a conventional 30-year fixed-rate loan.
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