Being a first time home buyer in Ohio, or anywhere, is exciting yet stressful. Avoiding a few first time home buying mistakes, however, can make the process more fun and less daunting. Here are seven home buying mistakes to avoid:
#1 – Fail to set a budget
One of the common first time home buyer mistakes is to start looking at homes before understanding what your budget will allow. There can be a huge difference in homes that are even just a few thousand dollars apart in price. So don’t waste your time looking at homes that you cannot afford. By understanding your budget before you begin searching for your first home, you can stay focused and avoid frustration.
#2 – Don’t seek out the best interest rate
Mortgage interest rates can vary from lender to lender, as can fees such as closing costs and discount points. It is important to get information from a variety of lenders so you can make the best decision for your particular situation.
#3 – Mistake the importance of a credit report
If you don’t know your credit score, you better check it now. Lenders will use your credit report to determine whether to approve your loan and to determine your interest rate. Before you meet with your lender, review your credit report and check for and correct any errors.
#4 – They don’t get a mortgage pre-approval
A mortgage pre-approval not only gives you peace of mind that you have already secured financing, but can also give you significant bargaining and negotiating power. Sellers are more likely to go with a home buyer that they know can pay.
#5 – Underestimate the size of the down payment
While your lender can help to advise you on the ideal size of your down payment, it is a bit of a judgment call. A bigger down payment lets you get a smaller mortgage, giving you more affordable monthly house payments.
#6 – Take on more than you need (or can handle)
This applies to how much you can financially handle in a mortgage payment and related homeownership expenses (think utilities, maintenance and upkeep, and furnishing), as well as how much physical house you can manage. More is not always better, especially if you are not equipped to take on the day-to-day upkeep on a large home. Consider both how much you can afford, and how much space you need to determine the best fit for your first home.
#7 – Get a mortgage that is not best-suited for you
Did you know that there are a variety of mortgage options on the market? Some are adjustable rate mortgages (ARM) and some are fixed rate. Be sure you understand what type of mortgage you are taking on, and how it might affect your monthly payments in the future if it is adjustable.
Knowing these simple first time home buyer mistakes and tips can help you avoid problems or unnecessary stress when looking for your first home. Contact us today and let Ohio Real Title can help you smoothly navigate your real estate closing transaction.