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Top 5 Problems First-Time Home-buyers should guard against

Top 5 Problems First-Time Home-buyers should guard against

Purchasing your first house is both exciting and nerve-wracking. You must find not only the perfect place but also the right mortgage. Finding an inexpensive home is also difficult due to low inventory and rising housing prices everywhere.

You may feel rushed to find a home, but your finances must be in order before you see houses and make bids. Your credit history, credit score, debt-to-income ratio, and overall financial picture must all convince a lender that you are creditworthy.

Here are some common first-time homebuyer problems and solutions.

Buying a Home with Debt

Purchase a house with debt is like running a marathon with weights on your feet. So you should be debt-free before taking on a hefty new mortgage.

How to avoid it

Purchase a property only after paying off all previous debt, including credit card, vehicle, and even student loan debt. After paying off your debt, prepare a three to six-month emergency fund before making a down payment on a home.

Lack of Down Payment Savings

Making a small payment on a mortgage is one of the biggest blunders. Hogan feels anything less than 10% is too low. Most people do not put 20% down on the property. According to research, it takes an average home-buyer almost seven years to save a 20% down payment on a typical home. According to the National Association of Realtors, the average first-time buyer puts down 5%.

How to avoid it

Smaller mortgages provide more equity in the home and lower monthly payments, and less interest during the loan’s term.

Paying Too Much for a House

Decide how much house you can afford before you go house hunting. Lenders often preapprove you for more than you need or should spend. In addition, it’s challenging to change a mortgage payment without selling the home or moving.

How to avoid it

If you haven’t already, look at your income and expenses to see how much your monthly mortgage payment will be.

Following the market’s lead

It’s easy to become excited about buying a home while mortgage rates are low, but it’s worth considering whether you’re acting impulsively.

How to avoid it

Regardless of low loan rates, now is not the time to buy if you can’t afford a down payment and other home-ownership costs.

Not Preapproved

Get preapproved, not merely prequalified to speed up the house buying process. Preapproval letters show you’re serious and expedite the paperwork if your offer is accepted. It also informs you how much money you can borrow from a lender to buy a home. Your credit, income, assets, and debts are used to establish your mortgage eligibility.

How to avoid it

Your initial step should be to visit with your lender to obtain pre-approved status. Then you can start looking for a home. This is especially true in a competitive market where deals are often finalized in a matter of a day.

Bottom line 

When it is about your first home, being informed about the lending and real estate processes can help you avoid costly mistakes and save you money. Having qualified, experienced personnel by your side will help ensure a seamless transaction. This can help reduce stress and complexity.

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