Buying a home is a lifetime decision for most people. The last thing you would want is for things to go wrong with this decision. You want to make sure you have a nice cozy home that keeps your loved ones safe and happy. At the same time, you also don’t want to be bogged down by a huge mortgage that makes living life difficult.
Many mortgage lenders may contact you via purchase mortgage leads if you have expressed interest in buying a home. Most might even offer you excellent interest rates and terms. But protecting yourself should be your top priority no matter what decision you take. If you don’t want to end up with a wrong decision that will make you regret all your life, here is a list of 5 mistakes you will have to avoid:
Underestimating the cost of your purchase
The deposit and the home loan are often the only things first-time home buyers think of while buying a property. There are a lot of other costs that they fail to take into consideration – stamp duty, solicitors’’ costs, inspection reports, Lender’s Mortgage insurance, and many more. You will have to estimate all these if you don’t want to end up in a difficult situation.
Not sticking to your budget
Buying your first home is an experience you should enjoy. You don’t want to be left with resentment. But many first time home buyers do end up here because they fail to stick to their budgets. In fact, many may not even have created one. You need a firm grasp on your monthly income and expenses before you say ‘yes’ to the mortgage lender who comes to you through purchase mortgage leads.
Start tracking down your expenses. You can maintain an excel sheet or download an app on your smartphone. Make sure you note down everything that you spend on, at least for a month or two. See if you can cut down on any of those expenses. Look for an additional source of income that will increase your budget. These things will help you come up with an affordable repayment strategy.
Not exploring your options
As a first-time home buyer, there would be many things that you may not know of. Ignorance could be bliss. But not knowing your options can make you miss out on so many opportunities that can make the home buying an easy and a happy experience.
Paying up that 20% down payment is the one thing that makes many to refrain from buying their own houses. However, there are many mortgage options that can help you get a loan for a lower down payment.
For instance, you can check if you qualify for an FHA or a VA loan. You can decide to pay up private mortgage insurance, which might increase your monthly payments but reduce your down payment. You can even take out a second mortgage or a piggyback loan to pay up for the part of down payment that you cannot afford. Nevertheless, you may have to pay a higher interest rate on this one. Make sure the option you choose helps you stick with your budget.
Not considering all aspects of the property
The first thing you start thinking when inspecting a property is how to arrange your furniture or remodel the bathroom. You get so involved with the aesthetics that you fail to consider the other essential points. Check out the local council and the services that it provides. Find out who your neighbors are. See how the suburb has been trending off late. Look for public transportation facilities and infrastructure in the area.
Failing to get a property inspection
It could take some time and efforts, but a building inspection can be a worthwhile investment. Not only does this bring to light, potential problems associated with the home, it will also help you get some grounds to negotiate on the purchase price. You don’t want to spend on repairing structural faults once you have spent all your budget, purchasing the home of your dreams.
Going with the first mortgage lender who comes to you via purchase mortgage leads may not be the right thing to do while purchasing your dream home. Do your math, get quotes from a few lenders, compare them, and then make your decision.