Buying your first home is an exciting yet stressful endeavor. You want to make sure you choose the right home since it is such a large investment, yet it's also easy to get swept away by the excitement of the entire process. The following are three key mistakes to avoid when you begin looking for your first house:
#1: Skipping the pre-approval process
You need to know what you can be approved for before you even begin looking at homes. Otherwise, you may end up shopping outside of your budget. This is bad because failure to get a loan means that you waste both your time and the sellers time, as well as risk losing any earnest money you put down on the home. A lender issues a preapproval for the top amount they are willing to loan on a house, but it isn't necessarily guaranteed since the final loan amount will depend on things like the appraisel of the specific home you choose. Also, keep in mind that a preapproval letter does expire, so check it carefully for the dates in which it is valid. You can usually get it renewed if you haven't found a new home by the expiration date.
#2: Not setting a budget
Another major mistake made by new homebuyers is purchasing a home that ends up being more than they can afford. This results in being house poor -- having such a large home payment that you can't afford the other costs of living. Set a strict budget before you begin shopping. Adjust your maximum monthly payment amount so that it reflects taxes, insurance, interest, and home maintenance costs. This can bring down the value of the home you can afford drastically, but you will be greatful later when you have a payment that easily fits into your budget. Also, make sure the final cost of the home also reflects any other budgetary concerns, such as necessary repairs.
#3: Ignoring inspections
Some types of home loans, such as an FHA loan, are contingent upon a home inspection. Other types, like some conventional loans, do not require a home inspection. Regardless of the requirements for your loan, invest in a thorough home inspection before finalizing any offers on the home. A major budget buster is being surprised by the need for all new wiring, a new roof, or a major plumbing repair shortly after closing on a house.
For more help, contact a real estate agent, like those from Knieper Realty Inc., in your area.