US News lists 10 mistakes first-time home buyers should avoid:
1. Not checking your credit report and score
2. Not getting pre-approved
3. Not creating a long-term budget
4. Forgetting about the hidden costs
5. Not using professional help
6. Picking your real estate agent and lender blindly
7. Thinking you’ll get everything on your wish list
8. Not keeping your feelings in check before hiring a home inspector
9. Not researching your neighborhood
10. Not considering the resale value of your home
While I’m currently a renter, I do plan to buy a home in the next few years. A home is the biggest purchase most of us will make in our lifetime. For that reason, it’s a good idea to spend some time thinking about these details.
The process of buying a home is often very emotional for first-time buyers. It’s easy to become attached to a particular home or feature, such as granite counter tops or walk-in closets. Before you even look at properties though, it’s important to get a copy of your credit reports from each of the 3 credit bureaus. You can do this for free once a year at annualcreditreport.com. You should do this about 6 months before you plan to purchase a home. It’s also a good idea to pay $20 to get your FICO credit score, which is the one lenders look at to assess your creditworthiness. These steps ensure that you will be offered a good interest rate on your loan.
When looking at your credit reports, make sure all information is accurate. This includes addresses, credit card accounts and loan balances. If you see an account you don’t recognize, or one that’s older than 7 years, submit a dispute to the credit bureau and also contact the creditor who put the account on your report. Let them know that the debt is not valid. You also want to have at least six months of on-time payments for all of your accounts. When you’re satisfied with your credit reports and score, you’re ready to sit down with lenders to get pre-qualified for a loan.
Just because you’re approved for a $230,000 home doesn’t mean you should buy one for that price. Look at your budget and determine a monthly payment you can comfortably afford. Remember that there are many extra costs involved with a house that you don’t have as a renter. These include: property taxes, regular maintenance, failed appliances, homeowners association dues, and homeowners insurance.
When you find a home you like, it’s important to hire an inspector to vet out any potential problems. He or she will look for issues with construction or mechanical systems and give you a repair estimate. If you decide you still like the house, you’ll need to factor this into the offer you make to the seller. Drive through the neighborhood at different times, day and night, to get a feel for the place you’ll be living. Is the location convenient to your workplace, grocery stores, schools, parks, etc.? Do you feel safe there?
Considering these details will save you from the most common hassles faced by first-time home buyers. By eliminating major issues before moving in, you can ensure a smoother path to your dream home.
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