By Emerick Peace
Operating Partner and owner of Keller Williams Preferred Properties (KWPP)
First-time home buyers experience various challenges during the process. When getting a mortgage, one should consider the following;
- Rushing the search process
Buying a home for the first time is a complex process and requires a lot of preparation time.
Speeding the buying process eventually costs the buyer. The reason is that the buyer does not take enough time to work on credit scores, particularly those less than 600. It leads to severe long-term consequences when looking for a lender and determines the mortgage interests one is given.
Rushing does not give one enough time to make savings that would be required as a down payment and can even make it impossible to acquire a mortgage one needs to buy a home.
People looking forward to buying houses are encouraged to prepare at least one year earlier. During this period, a buyer should be improving their credit score. Time also allows one to save more and clear off debt, thus increasing the chances of getting a mortgage.
- Waiving some critical contingencies.
Most first-time home buyers know little about a bought home inspection. A tendency to avoid this inspection costs the buyer in the long run. One needs a professional home inspector who can recognize problems the buyer might not recognize. It is essential to inspect because, in case of any issues, the buyer can bargain or even look for another home if it has severe damages
- Attempting to buy sight unseen.
There are occurrences where people buy property without seeing it. The act is precarious and would adversely impact the buyer. One may get a property that does not exist, which is very common. It would mean a loss in vast amounts of money and huge debts to be paid back to lenders.
Buying a home without physically visiting the place has disadvantages as a house could be in poor condition compared to what a person had seen online. Home could be situated in areas not conducive and insecure.
Potential buyers are advised to set aside time and physically visit the property they intend to buy. It makes the buyers aware of every detail they need and helps them prepare for any future expenses after purchasing the house.
Buyers Working without a realtor when buying a mortgage.
Some buyers risk when buying a home directly from sellers. It is a cheaper method, but in some instances, it is not always good. Realtors play a very significant role in the home buying process. They help buyers select the best lenders in the market with the best interest rates. Realtors also help clients locate the best property within their budget.
In-home buying, buyers should find a real estate agent to get the best homes.
- Buying more than one can afford
Most first-time home buyers are easily trapped in buying a home that is more than they can afford to pay. It affects the buyers as it can lead to foreclosure when one experiences financial constraints. Other than that, it also makes it challenging to fund a retirement account, education for children, and additional saving that a buyer has. It leads to difficulties in paying bills and other expenses that buyers incur.
It is always advisable that a buyer pay an affordable monthly payment but not necessarily the maximum limit now qualifies. Home buyers should be sincere with their lenders to avoid struggles during payment.
- Draining savings.
First-time home buyers are often lured into using all the savings on the downpayment and closing costs of a mortgage. By so doing, they are left with no savings to avoid paying mortgage insurance.
First-time home buyers are advised to have an emergency fund of three to six months as they pay for the downpayment of the home and the closing cost of homes.
- Credit carelessness
It is a norm for lenders to take a look at credit card reports during pre-approvals. Before closing, lenders recheck the credit if still report still good.
Most first-time home buyers encounter problems opening new credit accounts before closing. New credit tampers with a report and lowers the credit score.
First-time home buyers are advised to avoid new credit accounts or take new loans in the prior months before applying for a mortgage. Also, they are advised to improve credit scores by ensuring that bills are paid on time.
- Overlooking the FHA, VA, and USDA loans
Often, first-time home buyers are less concerned with government-based loans that help pay mortgages. Buyers avoid the home buying market since they do not have enough money, which should not be a bother. First-time home buyers thus should look for financing options to help in the home buying process. Preferably they should look for loans that require a minimum downpayment deposit to assist in the home buying process.