Most Common Mistakes That First-Time Home Buyers Make
January 22, 2025 | Posted by: Sherry Corbitt
If you are a first-time home buyer, this certainly is a whole new process for you. It is easy for you to make mistakes as this is all new for you. To ensure that you have the smoothest experience possible, consider the following buying errors and how to avoid them.
Not Knowing Your Credit Score
When going to a broker to get a mortgage, the lender that the broker receives for you will want to know your credit score. This will establish what amount you can get for your mortgage, ultimately determining the property you can get. If you do not consider your credit score before starting this process, you will be very surprised at what mortgage you can get. You may have a different idea in your head from what you realistically can get, depending on your credit score. This will not only disappoint you yet it can change many of your property plans and hopes. Before you even consider going to a broker or bank, ensure that you know what your credit score is. You may be surprised if it is lower than expected, yet at least you have time to raise it a bit. Having it higher will not only increase your acceptance rate for a mortgage, yet you will have much more options on what mortgage you can get.
Having a Small Down Payment
To get a mortgage, you usually need to have a down payment that is 5%, up to 20%. Depending on your circumstances, you may put down a smaller down payment. Although you may think that this is good, it is the opposite. When you put down a smaller down payment, you are not providing yourself with many options on what mortgage you can get. Your property choices will be limited, which may interfere with your plans. To avoid being stuck with a mortgage that is not right for you, wait to save for a larger down payment. Although waiting another year or two may seem long, it will be worth it. You will be able to select what property you want and succesfully be able to continue paying it off.
Using All Savings
This is a huge mistake that you want to stay away from. It is important to have savings for your mortgage, as there are many costs involved. Yet iff you put all your savings down, you most likely will not be able to continue your mortgage payments. If you cannot addord to make your payments, you most likely will get an expensive fee. To avoid a serious situation like this, ensure that you have enough money for this mortgage. It may take a couple of years to save up enough, yet it is worth it in the long run to wait. Then, you will avoid any issues, pay for all required mortgage fees, and continue making your mortgage payments.
Not Calculating the Costs
A mortgage process has many different costs for all sorts of reasons. These costs can include lender, broker, appraisal, and insurance fees, not to mention the cost of the mortgage itself. If you are going into a mortgage and have not calculated the costs, there is a huge problem. If you are fortunate, you will realize that you do not have enough from the start of the process. Yet, for some, they do not realize until later in the mortgage process and end up losing money from already paid fees. If you are unsure, even slightly, of the costs involved in a mortgage, speak with a broker. They can assist you in evaluating your mortgage situation and what your estimated costs will add up to. Then, with this estimate in mind, you can go over your money and verify that this mortgage is possible.
We all can make mistakes, especially during a mortgage process. When you learn from the mistakes of others though, you can avoid them in your mortgage journey.
If you have any questions regarding typical first-time buying mistakes, please reach out to me!
Sherry Corbitt, Mortgage Broker
Sources
-Lewis,Holden (2019). 12 First-Time Home Buyer Mistakes and How to Avoid Them. Nerd Wallet. Retrieved from https://www.nerdwallet.com/article/mortgages/first-time-home-buyer-mistakes-that-are-easy-to-avoid
