Are you getting ready to buy your first house? Shopping for a home can be an exciting – yet intimidating – experience. There are a lot of big decisions to make, but having some knowledge about the home buying process will make it more manageable.
Here are some common mistakes first-time homebuyers typically make.
Miscalculating the true cost of homeownership
There’s more to buying a home than just the monthly mortgage payment. As a homeowner, you’re also responsible for property taxes, homeowner’s insurance, repairs and maintenance, utilities, possible mortgage insurance, and more.
Not getting pre-approved
Before starting the home search, it’s important to know how much home you can reasonably afford. Your budget will determine the size and finishes in your home, so you may need to adjust your expectations accordingly. Pre-approval gives prospective homebuyers the maximum amount lenders will lend.
Remember: pre-approval and pre-qualification are different! Pre-qualification gives you a rough estimate of what you’re likely to qualify for based on the information you provided. In contrast, pre-approval goes a step further by providing the guaranteed amount you’re able to borrow based on a more thorough check of your credit history and financial background.
Not shopping around for lenders
Not all lenders are created equally. Fees, rates, and loan amounts can vary substantially by the lender so it’s a good idea to meet with several different lenders to find the right one for you. Reducing the interest rate by just a quarter of a percentage point can save you thousands of dollars over the life of your loan!
Getting too much house
Some homebuyers make the mistake of spending the maximum approval amount to purchase a home. You don’t have to borrow the full amount. Instead, focus on what monthly mortgage payment you can comfortably afford (including the extra homeownership costs!) and let that guide your purchase. That way you can maintain some financial flexibility.
Build your new home with Simplicity
We invite you to contact us when you’re ready to build your first home. At Simplicity, we have attractive and flexible new home plans that are perfect for every size family. To learn more about our homebuilding process and how to get started, reach out to us today. We look forward to helping you get moved into the home of your dreams!