Mistakes That You Can Avoid as a First-Time Home Buyer

Many first-time home buyers make mistakes when they go to purchase a home. There are some common errors that you need to be aware of. By avoiding these mistakes you're going to be better prepared as a first-time home buyer.

Small Down Payment

As a first-time home buyer, you probably want to save money but one thing you should not do is to make a very small down payment. By making a larger down payment, it's going to be easier for you to pay off your mortgage in less time. A larger down payment means you're going to have more money at the end of the month for other expenses besides your mortgage. with a larger down payment, you have a smaller mortgage and this means more disposable income.

How to Avoid the Mistake

The amount that you can afford for your mortgage is going to be a judgment call on your part. You should try to put as much money as possible on your mortgage because it simply lowers your overall costs. A larger initial payment will lower your costs monthly. This will also reduce the amount of interest that you're going to be paying on your mortgage.

In general, you should try to pay at least 20% on the mortgage if that is possible. This will also lock you in at a lower rate and improve the chances that you get approved for the mortgage. Some lenders do accept applicants that put less than 20% down but that amount is a good rule of thumb to go by.

Knowing How Much You Can Afford

One common mistake new home buyers make is trying to buy a home that they simply cannot afford. If you try to take on it too much debt and pay off a home that you can't really afford, this is not going to work out well for you. You may end up with monthly payments that are so extreme you have no money left over for anything else or you may start missing mortgage payments and end up losing the home.

How to Avoid the Mistake

A simple way to avoid this mistake is to use a mortgage affordability calculator. This will help you understand the price range that you can afford for a home and what homes might be out of your price range.

Using All of Your Cash

Whenever you buy a home there can be repairs that need to be done. For example, a home what might be damaged during bad weather, the water heater might break, or you can have other repairs that need to be done. First time home buyers don't take into consideration the fact that they need a lot of extra money in the bank to pay for these repairs and added expenses. The cost of the home is not just a mortgage it's the general upkeep of the home.

How to Avoid the Mistake

To avoid this mistake, you should have enough money saved up to make your down payment. You should be able to cover moving expenses as well as the closing costs of the home. You should have enough money to pay for repairs that might need to be done. The lender will let you understand the closing costs and you can figure out the moving expenses on your own. The main thing to keep in mind is that you must have enough money to cover other things besides just the mortgage.

Not Looking at Programs for First-Time Home Buyers

As a first-time home buyer, you might not have a lot of money saved up for your down payment and at the closing costs. While it is better to have a lot of money saved up, you can still take advantage of low down payment programs which can help you out. You'll be able to get competitive mortgage rates and down payment assistance through these programs.

How to Avoid the Mistake

You should talk with your lender about any programs that are available to you as a first-time home buyer. These programs can make it easier for you to buy your first home even if you don't have a lot of money saved up to make that initial down payment. You should talk to the lender about any loans or other programs that you can take advantage of that can help you buy your first home. It’s also a good idea to do your own research and compare all the available mortgages you can get. You can use CompareMyRates.ca, which is a comparison tool that you can use to quickly compare all kinds of mortgages and choose the best one for you.

One Quote Only

Many first-time home buyers just get one quote and that's it. They feel that this is enough for them to purchase the home. You have to understand that the rates will vary at lender to lender as well as the closing costs. By not getting additional quotes, you may not get the deal that works for you.

How to Avoid the Mistake

You should talk with multiple mortgage lenders as you can compare their rates and what they offer you. You can then pick the best deal that suits your needs. You will find a wide range of lenders and mortgage rates so you need to pick the best rate that works for you

Credit Reports

You should check your credit report and correct any errors that might be in it. This can make it easier for you to get a loan and be approved for the loan. If your credit report contains any errors then you might get an interest rate that's higher than a rate you should be getting. It's important to check your credit rating to ensure that it's accurate

How to Avoid the Mistake

You can request a free credit report and then look at this report to see where your stand. this will let you understand your credit rating and where you can improve. By improving your credit score, you can increase the chances that you get the home that you want.

Summary

These tips should make it easier for you to obtain the right mortgage for your needs as a first-time home buyer. Make sure you follow these tips to avoid making a mistake.