The process of purchasing a home almost guarantees a huge range of emotions and the initial excitement is almost unbearable. As time progresses, what was once complete hysteria quickly has the ability to turn into anxiousness and complete frustration. To simplify what can be one of the most mentally taxing experiences ever, use these tips to be sure this milestone remains a positive, memorable and stress-free!
Not Saving Enough Money
While it’s not always necessary to put down a large down payment, it’s also not very wise to completely wipe out your savings account and have no additional money for moving expenses, personalizing your new home, life happenings or future home repairs. The down payment amount actually differs depending on the preference of the buyer. Some people prefer the minimum of 3.5%, while others look to upwards of 20% and beyond – therefore lessening the monthly mortgage payment. Closing costs, the money needed to close a mortgage needs to also be saved and put away. Before even jumpstarting on the home search prematurely, be sure to maintain at least three to six months of expenses in your savings account at all times.
Making an Emotional Purchase
Have you been watching all of the home buying or renovation television shows and all of a sudden you want to sign the dotted line? Refrain from allowing your emotions to dictate such an important (and expensive) decision. If there’s been a lot of change in your life as it relates to family or employment, take the necessary time to wind down and consider what’s really at stake. Be sure to ask yourself, “will this decision negatively impact me or my family in the future?” If the answer is yes or you’re unsure – avoid making hasty moves that you’ll later regret.
Paying More Than What You Can Comfortably Afford
The most important thing to keep in mind here is 100% honesty within yourself and your finances. Dedicate some time to thoroughly review your overall budget and assess the minimum and absolute maximum amount for a mortgage payment. The last thing you want to do is purchase a home and suddenly become unable to maintain bills and any other lifestyle expenses currently in place. Remember life continues after the purchase, so make sure there are enough funds after pay periods to satisfy all other financial obligations.
Failing to Review Credit Report
Lenders will conduct a hard pull on your credit, revealing your credit score which determines the amount they’re willing to loan. The debt-to-income ratio is also a key factor that can have an impact on the interest rate. If it’s been some time since you’ve taken a deep dive into your credit report, use one of the many available resources online to request this information for little to no cost. Pro tip: get your numbers through Turbo. Your credit score, income, debt and credit accounts come together in Turbo, so you know where you stand and how lenders may view you.
Completing this prior to the buying process provides ample time to dispute any items that are inaccurate.
Purchasing the Home Without Considering the Neighborhood
Even though the focal point for a lot of potential buyers is the actual home itself, you must also become content with the neighborhood and surrounding area. School zoning for children, work commutes and any other commodities that are of importance to you should definitely be considered. Compare the value of other homes within the neighborhoods that are of interest to ensure a smoother selling process in the instance you need to relocate or determine another home better suits your family in the future. Ideally, you want to be in an area that appreciates over time, which increases the resale value of the home. It’s also a good idea to cruise through and assess neighborhoods at various times of the day. Is there a lot of traffic? How does your commute differ? These are important questions that need solid answers to make the best, sound decision.
Waiting for the Perfect House
Establish a list of ‘must haves’ and ‘nice to haves’ before beginning your home search. Are the things you absolutely must have in your budget? Are there opportunities to upgrade amenities at a later time? While a rushed decision isn’t encouraged, finding a perfect home with every single thing on your wish list can be very slim. Don’t compromise the number of bedrooms or ideal locations. Fixtures, appliances and other cosmetic items can be budgeted for and upgraded at your pace.
Rushing the Process
Everywhere in the United States, the home market seems to be high intensity and fast-paced, with houses flying off of the market within a matter of days. However, please take the time to consider if this is the right move. The last thing you want to do is offer too much for a home or overlook key aspects just to reach a final decision. Don’t dread the moving process or the mechanical parts of settling into a new place prematurely. There’s nothing worse than moving just to move all over again wasting energy, time and money shortly after because of an impulsive decision.
Disregarding First-Time Homebuyer Programs
Educate yourself on the programs available in your area. Varying from state to state, these programs can offer supplemental information, assistance with down payments, closing costs and more. Here’s brief information about a few of the many government programs available:
VA loans are backed by the U.S. Department of Veteran Affairs, exclusively for those that have served in the military, current military personnel and their families.
USDA loans require little to no down payment and are funded by the U.S. Department of Agriculture for homes in designated USDA rural areas.
FHA loans assist those with lower credit scores, insured by the Federal Housing Administration while requiring a smaller down payment compared to conventional loans.
While the home buying process can appear daunting and overwhelming, there’s a sigh of relief that happens when a well-informed, sound outcome is reached. Trust the process and rest assured the house you buy will develop into a home if your dreams. The more you know ahead of time accompanied with being prepared, will create a time to remember.