Finding and purchasing a home is a big deal. In many situations, it is overwhelming. This is especially true for those who are new to the process.
While this is true, the last thing anyone should do is select the wrong home and regret it down the road. One option to help buyers avoid some of the most common mistakes is to work with the professionals, such as DollarBack Mortgage. It is also smart to get to know some of the most common traps and mistakes that occur. This is a surefire way to avoid them.
1. Purchasing Too Much House
The housing costs should never exceed 30% of a buyer’s take-home pay. The housing costs that are referenced here mean the actual mortgage payment, the property taxes, and all homeowner's insurance costs. It is important to keep the figure in mind when deciding what a person can spend on a home. If the 30% threshold is exceeded, the buyer may find they fall behind on the housing costs, their emergency savings fund, or some of their other bills.
Also, remember that home maintenance is time-consuming and expensive. It is also a part of owning a home.
2. Failing to Put 20% Down on the Mortgage
It is not absolutely required that a person make the 20% down payment on the home. However, if someone doesn’t do this, they will likely have to purchase PMI—private mortgage insurance. This is a premium that is paid to protect the lender and will run about 0.5% up to 1% of the total value of the home loan each year.
3. Not Increasing a Person’s Credit Rating Before Getting a Mortgage
A person’s credit is a huge factor that lenders look at when they determine if someone can qualify for a mortgage along with the interest rate they are offered. If someone has a credit rating that is great, they will be offered more competitive rates. However, if their credit rating is just okay, they will pay a lot more on interest for the home loan they receive. As time passes, this can add up.
4. Accepting the Very First Mortgage Offer
Applying for a mortgage can be a huge hassle. While this is true, it will pay off when a buyer goes through it a few times to ensure they have found the very best rate available. If someone opts to accept the initial home loan they are offered, they will not have any way to know if they could have qualified for less interest. It is best to shop around, especially for those with a good credit rating.
5. Not Understanding HOA Membership
Homeowners associations or HOAs are governing bodies in certain housing communities. These are common in newer developments. With an HOA, a homeowner must pay dues to cover certain amenities. However, these can be costly, so it is a good idea to find out what the total assessments are before purchasing a home that is within an HOA.
By avoiding the mistakes that are highlighted here, anyone will be on their way to getting a great home that fits their needs and budget. Be sure to work with the professionals to ensure the desired results are achieved. In the long run, this will pay off and help provide the desired outcome.
13 July 2020
