Buying a home for the first time has a lot of challenges, but by avoiding these mistakes those who are shopping for a new home can save some money. There are a lot of things to consider such as the area of the home, the size of the home, and financing options. A good real estate agent can guide the homebuyer through the process. There are a few common mistakes that buyers make which you should be sure to avoid when you purchase a new home.
Mistake #1: Not Having a Realistic Budget
How to Figure Out Your Budget
One of the ways that homeowners damage their own financial wellness is by overestimating or going over their budget. There are a lot of expenses that come with owning a home, including maintenance, fees, utilities, and taxes. All of those costs add up on top of the mortgage payments. Experts recommend allocating 30 percent of the buyer’s budget to home costs, including the mortgage payment, downpayment, and agent fees. The best way to figure out how much you can afford to spend on a house is to look at 30% of what your monthly budget is and not spend more than that.
Going into buying a home without having already established a financial budget for yourself is a bad idea. Before even considering putting a downpayment on a home, you should be at a point in your life where you have a clearly laid out budget that you live by. If you have not already created a budget for yourself, start today by using one of the many online budget templates that are free on the web or by working with a financial planner.
Needs vs. Wants
Prioritize what you need over what you want when shopping for a home. Having top-of-the-line amenities and extra space would be nice, but if you do not need it and can’t afford it, you should take it off the list of what you are looking for. Differentiate between things that you would simply like to have and things that you absolutely need to have and do not overextend the budget on things you could live without.
Mistake #2: Not Assessing All of the Options
Shop Around For Rates
Getting a mortgage for buying a house can be a stressful process and a hard decision which is why many buyers are quick to take the first mortgage they can find from a qualifying lender. This is a mistake because by shopping around the buyer can find better rates on the mortgage which could save them a lot of money in interest fees.
Get Pre Approved
The first step to buying a home is usually to get pre-approved for financing unless you are buying the house with cash which is a lot less common. Shop around for pre-approval rates from multiple financing sources and loan officers. There is no obligation to take the first offer you receive for financing, and you could end up wasting a lot of money by not assessing all of the options available.
Some lenders offer competitive rates in order to sway you to finance through them, so take advantage of this. Also be sure to compare the rates of federal housing loans with private lenders because even with the lower down payments required by the FHA or VA, the insurance and interest rates could be higher.
Mistake #3: Working with the Wrong Agent
Staying Under Budget
An experienced real estate agent can guide you through the process of buying a home. This is important because if it is your first time buying a home you may be lost in the wind without a clue of where to start. A trustworthy real estate agent will help you stay on budget, or even under budget. No reputable real estate agent will try to pressure you to go above your budget, although it is normal for them to include some options which are higher than your budget for your consideration.
Handling the Paperwork
New homebuyers will see the amount of paperwork, inspections, and fees as being daunting. A real estate agent with lots of experience working with home buyers will know exactly what to do and take a lot of the stress off of the buyer. They will file paperwork for you or guide you on how to do it yourself. Another benefit is that they can negotiate with the seller for you. It is not good enough to rely on a verbal commitment from a seller, to protect your investment and make sure that you are getting everything that you agreed upon, the deal should be solidified in writing with signatures.
Contact Wendy at Wendy Gimpel Real Estate if you are in the market for a new home. She is offering virtual showings to clients with iPhones in the Stillwater area and surrounding communities for everyone’s safety. Wendy’s knowledge and experience in the real estate industry will help you find the perfect home.