When it comes to buying your first home, there are a lot of tough decisions to make. While home shopping can be exciting at first, when you delve deeper, things can get more complicated which might result in buyer’s remorse.
If this is your first time buying a home, then listen up! In this article, we’ll talk about the 7 common pitfalls that can happen to first-time home buyers, and how you can avoid them:
Love-At-First-Sight V. Reality
“It’s very easy to fall in love with a house you can’t afford,” says Elizabeth Gordon, a business writer at State of writing and Bestbritishessays. However, “your ‘dream home’ might have hidden costs, like routine maintenance, repairs, and insurance. So, when touring homes, be realistic about the potential costs. If maintenance is likely to be minor, this might be factor in choosing that home.”
Believing The 20% Down Payment Myth
It is a sometimes held idea that you require a 20% deposit to buy a house. While this percentage does usually help you avoid paying lenders mortgage insurance, many buyers today can’t or won’t put down that much money upfront.
So, check with your real estate agent, bank or mortgage broker about specific requirements and budget. Plus, find your state housing programs to see if you qualify for housing assistance programs designed for first-time buyers (which will get to later on in this article).
Not Consulting Your Loan Officer
Never make financial decisions without consulting your bank loan officer or mortgage broker first.
When you begin the mortgage process, the decisions you make will affect your entire application. And, if anything changes in your financial situation (e.g. getting a new job, getting a credit card, or cosigning on something), you might not qualify for the same loan terms, or get a mortgage at all. So, consult your bank loan officer or mortgage broker before making any new financial moves when you are in the process of purchasing your first home.
Ignoring Your Credit Record
Your credit record impacts your eligibility in obtaining a mortgage. Financial institutions will check your credit record as part of their mortgage approval process, so it is important to maintain a clean record.
Credit bureaus like Experian and Equifax can help you access your credit record.
Taking Things Too Fast
When buying a home, you might get caught up in the moment, or get pressured to buy right away. Not planning ahead for your purchase can be detrimental to the entire situation, as rushing into the process can give you very little time to save enough for a deposit and closing costs, and could prevent you from securing more favorable loan terms.
Try and have a road map for your home buying process at least a year in advance. While it may take a some timeto improve your credit score and save enough for a decent deposit, this will ultimately place you in a more favourable position when attempting to purchase your first home.
Not Talking To Multiple Lenders
“When it comes to getting a mortgage from a lender or bank, don’t just settle for one,” says Jenny Jordan, a marketing blogger at Best essay writing services UK and Write my essay. “You might be leaving thousands of dollars on the table without knowing it.”
So, shop around for potential lenders and look for a good deal and the lowest interest rates and fees possible.
“Consider talking to at least 3 different lenders, along with a mortgage broker,” adds Jordan. “Compare everything from interest rates, to lender fees, to loan terms.”
Ignoring First-Time Home Buyer Programs
As mentioned before, there are some programs that specialise in helping first-time home buyers purchase their first home. Here are some programs to consider:
- The First Home Owners Grant (FHOG) varies from state to state, and offers a one-off grant to assist with your home purchase. Take a look at this site to learn more.
- If you live in the Northern Territory, check out the Household Goods Grant Scheme, which offers up to $2000.
- If you live in Victoria you may be exempt from stamp duty. This is completely separate from the FHOG. If the home you are purchasing is valued at up to $600,000, you may qualify for a complete stamp duty exemption. Or, if your PPR value is from $600,001 to $750,000, you may qualify for a stamp duty concession.
- At the time of publishing, the Victorian government has also announced further stamp duty waivers for residential property with a dutiable value of up to $1 million, however this particular waiver is only in place for a limited time (for contracts signed on or after 25 November 2020 and before 1 July 2021) and you should check the Victoria State Revenue Office website for further details including eligibility criteria.
As you can see, home buying can be stressful and confusing at first. However, if you ask the right questions, and avoid the 7 common mistakes outlined above, you can give yourself a good chance of ensuring your first home purchase will go smoothly.
Kristin Herman is a writer at Study demic and Top Canadian Writers. She is also a contributing writer for online publications, such as Big assignments. As a marketing writer, she blogs about the latest trends in online advertising and social media influencing.
This is general information only and contains only the views of the author(s). It is not financial advice or recommendations, and does not take into account your personal needs, objectives and financial circumstances. Please carefully consider whether this information is appropriate for you.