Common Mistakes New Home Buyers Make

Buying a home is a huge investment and one that you should consider carefully. The process can be stressful, and many first-time homebuyers end up making costly mistakes. Knowing what to expect can help make the process much smoother. 

There are many mistakes that people make. They range from failing to choose the right mortgage to accumulate too much debt. Knowing the common mistakes that new home buyers make will help you avoid them. 

Buying When You Have Debt

One of the most common mistakes that people make is buying a home when they are in debt. It is important to be financially unencumbered before you take on a new mortgage. Buying a home when you are in debt can lead you to financial problems. 

You can be in a situation where you do not have money to pay for anything else. To avoid this mistake, hold off on your home-buying plans until you clear all your existing debt.

Not Having Enough Down Payment

Another mistake that people make is failing to save enough for the down payment. When getting a mortgage, put down a large down payment of not less than 10 percent. Most experts recommend you put down at least 20 percent. 

Down payment is usually the biggest hurdle in buying a home. Save as much as you can before purchasing a home. Having at least 20 percent of the total cost will help you avoid making high mortgage insurance payments. You can also investigate grants for first-time home buyers. 

Buying a Home You Cannot Afford

Many first-time homebuyers end up buying a home that they cannot afford. This puts them in a financial bind as they find it difficult to keep up with the payments. Many lenders pre-approve buyers for more than they need. 

Ending up with a mortgage payment that you cannot afford can place you in a difficult position. To avoid this problem, look for a home that is within your budget. Consider your income and find out all the costs and associated fees.

Making Impulsive Purchase Decision

Many people make the mistake of buying a home simply because mortgage rates are low. Buying a home in a rush without considering the financial implications is a mistake. The market should not dictate when you purchase a home, regardless of the low-interest rates. 

To avoid the mistake, wait until you have enough for the down payment and then budget for the mortgage payments. Remember, there are additional homeownership costs that you might not be thinking about.  

Failing to Get Pre-approved

Not getting pre-approved is a common mistake that many homebuyers make. It is not enough to be prequalified; you need preapproval. A mortgage preapproval will give you a huge advantage in the home-buying process. 

It will allow potential sellers to know that you are serious while letting you know how much you can get from a lender. To avoid the mistake, meet with your lender before you embark on the home-buying process. 

Other common mistakes that you should avoid include getting the wrong mortgage, choosing the wrong mortgage lender, and cosigning your mortgage. Talk to a financial expert before making the home-buying decision.

For more on common mistakes new home buyers make, visit Prime Property Group at our office in Oakland or Sacramento, California. You can call (510) 225-0470 or (916) 822-9655 today to schedule an appointment.

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