Avoiding First-Time Homebuyer Mistakes
How to be smart about applying for your home loan and choosing the right house
As a first-time homebuyer, you're taking a step in the right direction by learning more about the home buying process and pitfalls. Whether it's applying for a home loan, house hunting, making an offer, negotiating a final price or arriving prepared on closing day, there's plenty to know. Be sure you've read up on the mortgage process, and then review these common mistakes new homebuyers make so you can avoid them.
1. House hunting and making an offer before getting pre-approved for a mortgage
A common misconception is that first you find the house you want, and then you start looking for a mortgage. In fact, you should do the legwork on the home loan first. Lenders will take a thorough look at your credit and financial history to determine how much they're willing to lend you. If everything checks out, they will present you with a pre-approval letter for a mortgage. This will tell you and potential sellers just how much you can afford to spend, making your bids more solid than those coming from others who lack pre-approval.
2. Assuming you can afford your rent plus a little more
As a first-time homebuyer, it's important to account for expenses you don't have as a renter, like property taxes, higher maintenance costs and possibly even some utilities. These will likely add up to more than just a few hundred dollars more per month. Sit down and create a full budget to determine your most feasible price point.
3. Buying a home that lacks mass appeal
If you buy a home now that only appeals to a few buyers, it may be hard to sell later. So think twice before you buy a house that's adjacent to a highway, sits on a busy four-lane road or lacks what are considered local must-have features. Depending on where you live, these could include a garage, washer/dryer hookups, a dishwasher, backyard or basement.
4. Relying on verbal agreements
Unfortunately, new homebuyers don't always remember to get everything in writing. When you hire a real estate agent, you should both sign an agreement that assures the agent's confidentiality and outlines what will happen if you suspend your house hunt or find a house on your own. When you are trading offers with the seller, wait until you have received a signed purchase agreement before you take any next steps.
5. Forgetting to budget for closing costs on your home loan
Once the negotiations are finalized, you'll set a closing date. You'll probably have to bring a certified check for several thousand dollars to that meeting, so be sure to account for that! The closing agent will present you with a Good Faith Estimate, which gives an approximate total of the costs. You won't find out the exact number until a day or two before closing. At this time, ask what the rules are regarding acceptable forms of payment.
Work with Citizens Bank on obtaining your mortgage
You're bound to have more questions as a first-time homebuyer, so work with Citizens Bank's home loan originator to make the process easier. Whether you're just starting the process or ready to begin your home loan application, they can help. Call 1-888-514-2300 to learn more or start your online mortgage application.