Friday, September 29, 2023 / by Ryan De La Uz
First Time Homebuyers: Avoid these Blunders
Buying a home in New Jersey? Avoid these home buying mistakes, which are so very common, especially when you are a first time home buyer.
Not figuring out your affordability
One of the biggest first time home buyer mistakes is not figuring out an affordable price range for your new home. If you don’t budget and have no idea how much to spend, you would be wasting your time.
Your goal shouldn’t only be buying a house, but should be to buy a house that you can afford. Aim for something on the lower end so that your mortgage payments don’t keep you up at night. Determine your affordability through various online tools, or you could ask your realtor or mortgage broker to evaluate your finances, and accordingly, show you affordable homes.
Paying only a small down payment
It’s possible to buy a home even when you’re only making a down payment of 5% or less. But is it recommended? Sometimes it may be a good idea, but homeowners have had their regrets. A recent survey concluded that 11% homeowners who were 35 years or younger wished they had waited and saved more for a bigger down payment.
This takes more time, but it may be worth it. When you pay more upfront, you require a smaller mortgage which means you can get a lower interest rate and pay back the loan faster at more affordable monthly payments.
But while you should pay a greater down payment, you shouldn’t wait too long. When you become a homeowner, you build equity, which is something you wouldn’t want to miss out on. Waiting also means that home prices and interest rates may rise, making it more difficult to buy a house that you want.
We’d suggest that you wait as long as your monthly payments become affordable to manage over the entire mortgage term. Talk to your realtor, and they’ll guide you better, keeping your financial situation in mind.
Using up all your savings
Never ever use up all your savings for the down payment. Should you buy a home that has been lived in before, you may have to face a repair sooner than you think. So ensure that your emergency funds are big enough to cover all these unforeseen expenses. Get estimates from your realtor, and you’d have an idea of how much more to save other than the down payment and closing costs.
Ignoring various loan programs
Another common first time home buyer mistakes is not finding out about government loan programs, which include VA loans, FHA loans and USDA loans. These allow you to buy a home even with zero or 3.5% down payment.
Schedule a consultation session at https://RyanDeLaUz.com, and let us ensure that you avoid all first time home buyer mistakes.