We all make mistakes the first time we do something, and the process of buying your first home takes no exception. In this first blog in a series of two, we are sharing with you the most common homebuyer regrets that you’ll want to be aware of, before you make the same mistakes!
20% of homebuyers wished they had saved more money before buying a home
Prior to even thinking about buying your dream home, you need to figure out what you can realistically afford. You will thank yourself in the long-run after meeting a price that fits your budget in a reasonable fashion so you are debt free. This means that you need to analyze important personal financial areas that play roles in your home-buying journey. These vital financial areas include: income, expenses, assets, savings, and debts.
The most efficient way of analyzing your personal finances is to sit down with your financial advisor and ask for their advice. This will allow you to know where you stand and what your appropriate price range is. If you don’t have a financial advisor, then just get out a piece of paper, and write down all of your assets in one column (cash, retirement accounts, hard assets), and your liabilities in the other (credit card balances, loans, etc.) Your net worth is your assets less your liabilities. Your loan-to-value ratio is your assets minus your liabilities, divided by your assets. These are two simple calculations lenders take into serious account.
After analyzing your finances, it’s time to ask yourself more personal questions. Are you ready to stay put for the next few years? Many variables factor into this like decisions, such as job stability, raising a family, happiness with location, how much room you will need to grow into, and more.
For the most part, staying put for 3-5 years or longer is usually a good forecasts on the amount of time to plan on staying at your new home. You do not want to buy the house for a great price then not be able to gain a profit due to having to go threw the selling process during a poor time in the market.
13 percent would do more research on the mortgage lending process
Homebuyers tend to be intimidated by the process of applying for there first mortgage. First things first, you should contact a mortgage company to see if you are able to qualify for a loan. This is where credit issues becomes a concern for homebuyers. Your credit score will be the decider as to if you qualify for the loan along with the interest rate on top of the mortgage.
A good rule of thumb is to go into the mortgage lending process with a clean, balanced credit score/history. To do so, make sure past due bills are paid in full along with paying any lingering balances on your credit cards. Homebuyers credit scores are usually referred to as the most important decider when determining the status of qualifying for a loan.
After confirming that your credit score is on track, you will be pre-approved for a certain amount of money, which will allow you to go looking for homes with more confidence. Our Realtors can make this process easy by recommending a few mortgage brokers that meet our stringent and professional standards.
Because lending is such an integral part of the home buying process, we’ve decided to create a workshop for first-timers. At our First-Time Homebuyer Workshop, we will have a mortgage lender on site to lead you in a discussion of how the process works, and what not to do in the lending process that could sink your application. These workshops happen a few times a year, so check back to our events page often to see when the next one is!