Purchasing your first home can be exciting. However, it can also be nerve-wracking for a first time home buyer. This is because there are many variables to consider. For instance, you need to consider the right place, the right amount of loan or mortgage, and several other things. As you may know, currently there are fewer home listings in several local markets, due to which the price of the same properties are rising as well. With such a scenario, it can be challenging to get a new home.
This may make you feel like the decision needs to be made right now! But believe us, doing so rarely brings any good. There are a few things you need to consider before doing so. For instance, you need to see whether your finances are in order. You also need to visit a few houses to select the most appropriate one. Other things you need to consider include the health of your credit history, your credit score, your financial situation, and your debt-to-income ratio.
Mistakes made by first time home buyers mostly fall within the realms of actually purchasing and of getting a mortgage.
Here are the mistakes to avoid when buying a new home.
Nasty surprises cropping up while buying a home can be pretty unpleasant, to say the least. For instance, you decide on a house but then discover that you and your wife have a glaring credit problem. In such a situation, chances are your credit application will be rejected.
Credit issues include late payments, considerable credit debt, debt collection issues, and others. Either way, any of these instances can be pretty frustrating. To ensure that you have no credit issues, check your credit report at least twice a year. Doing so will tell you about any administrative mistakes and your own credit issues if any. You can check your Credit Report from the three Credit Bureaus, namely Equifax, Transunion, and Experian.
If you find any mistakes or errors, get back to the concerned agency with the appropriate documentation and proof. If you do find genuine negative items, know that you cannot remove these before 7 years at least. What you can do instead is pay your bills on time, make sure that you’re not maxing out your credit limit, and pay more than the minimum monthly payments.
If you have a low credit score, please be patient. It can take upto a year to see a positive change in your credit score. When it comes to buying a new home, your credit score is very important. If the score is below 620, most lenders will refuse your mortgage.
Most sellers won’t even consider your offer to buy a property if you do not have a pre-approval letter. The letter is important as it shows that you have finances enough to pay the bills based on your credit score and credit history, employment history, income, financial assets, and other variables.
This document also shows the amount of loan for which you qualify, along with the loan program, interest rate, and down payment amount as estimated by you. Some lenders, in addition to this document, may also want proof of your available funds for the estimated down payment.
Remember that the pre-approval letter has an expiry date, which is usually 90 days.
Sometimes people think they don’t need a real estate agent, and can search for and purchase a home on themselves. Most of the time, this does not prove to be possible. This is because the process is complicated and takes a lot of your time. The best thing to do is to hire a real estate agent. An agent not just helps you in finding a property, but also in negotiating with the seller. The best thing is that you often don’t need to pay him as a first time home buyer. He shares the commission with the seller’s agent from the fees given by the seller.
If you avoid these mistakes, you can get a new home with ease. If you have been careful and ready, why not apply for a home loan from mymoneykarma? The whole process is seamless and extremely convenient, not to mention the low rates of interest on offer. Check your eligibility right away.