Buying a home is a big step for most families. Many may have worked for years to get to the point where they can finally make a down-payment on a home and begin paying off a mortgage. Entering into this process, however, can be a bit scary for many. You may be worried about making mistakes with such a large purchase and complicated process. With that in mind, below are five things to watch out for as a first-time home-buyer.
Pay Off Your Debt Beforehand
The mortgage approval process isn’t perfect. In some cases, individuals who should not be given a mortgage are approved anyway. Overall, you know your own financial situation better than anyone else. One of the biggest mistakes that can be made is buying a home when you really can’t afford one. If your financial situation is somewhat bleak, you should probably put off buying a home until later. This is especially the case if you already have substantial debt. If you have too many large bills, you may have trouble also making your mortgage payments. If you default on your mortgage, you will lose your home to the bank. Make sure you are in sound financial health and relatively debt-free before you decide to take on a mortgage.
Know the Neighborhood
Just because a home meets your different criteria in regards to rooms, space, and more does not mean that is the right home for you. You also have to consider the context of that home in regards to the overall neighborhood. If there’s a high crime rate, you probably don’t want to risk living there. You also need to consider the quality of the school district if you have children. The climate might be too hot or too cold for you. The employment prospects in a neighborhood are another factor. The commute to work may be too long. Even the entertainment options available should be factored in. Overall, you need to visit that community. If you are interested in Palm Coast Florida homes, for example, certainly visit Palm Coast and become familiar with Flagler County in general.
Don’t Forget to Consider a Government Insured Mortgage
If you believe you couldn’t afford the down payment for a house or that you would be rejected by a traditional lender because of your credit score, you should also be aware of the fact that alternatives are available. The best options are probably government-insured mortgages. These are mortgages backed by US government agencies like the FHA, USDA, and VA. FHA, for example, stands for Federal Housing Administration. Due to the fact that government loans are less risky than private loans, you can obtain an FHA-backed mortgage with a poorer credit score than you would be able to with a bank. The down payment will likely be smaller as well. However, you may be required to purchase mortgage insurance to obtain the loan.
Realize There Are Additional Costs of Being a Homeowner
In regards to buying a home, most people tend to only consider the down payment and the mortgage. This is a mistake since there are other costs and expenses you should be aware of as well. Just some of these possible extra expenses include the cost of utility bills, property taxes, homeowners insurance, mortgage insurance, and hazard insurance. You should also factor in the possibility of having to pay home repair bills when things go wrong as well as work done to maintain the house and it’s different systems. Overall, you need to budget in all possible expenses and have a cushion in savings for other unexpected expenses as well.
Don’t Forget to Get a Home Inspection Performed
Something you absolutely must do before buying a home is having a home inspection performed by an independent third party. Even if the home appears in good condition to your own eyes, there may be serious issues you are unable to detect as a layperson. A good home inspector should be able to spot problems with different home systems and things like shoddy workmanship that could end up creating extra expenses for you in the future. If problems are discovered, having those problems fixed by the seller should be part of the negotiations.
Buying a home can be scary. Indeed, there’s a lot that can go wrong. You could also make serious mistakes if you’re not careful. However, if you become more educated on the process of buying a home, you will have less to worry about. Take the above advice into consideration and always make sure to perform thorough research before arriving at the decision to buy a house.