Buying a home is a major purchase, to put it mildly, and there are plenty of ways to trip up. There are lots of steps you need to take to ensure your home buying experience is the best it can be. This can be one of the most stressful buying processes you go through, but don’t worry, here are some helpful tips to get you prepared.
- Having too much outstanding debt. If you have outstanding debt, it’s not going to be easy when it comes to qualifying for a mortgage loan. At least six months before wanting to purchase a home, you should focus on paying down outstanding debt and getting your credit on track for the upcoming purchase.
- Not having your financing ready when you make an offer. If you want a house, and you love it, you don’t have any time to waste. A major step back could be not having your finances in order which consists of more than just the mortgage loan, you also need to consider your down payment, and how much you’ll need to budget for the potential financial difference between your current home and new home.
- Miscalculating how much you can afford. Before you start thinking about kitchen appliances and how many bedrooms you need, it’s important to determine how much mortgage you can reasonably afford. The worst mistake you can make is buying too much of a home that could put yourself and your family into a terrible financial situation. Sit down with a Financial Service Representative to discuss your finances and how much you can reasonably afford in a home.
- Using your emergency savings account for a down payment. When it comes to buying a home, the more you have in savings, the better. But the money you’re putting away for a down payment should not come from your primary savings account. Instead, you should establish a separate account and put extra money away for the down payment. It’s a huge mistake to buy a home and completely liquidate your savings account with nothing to fall back on.
- Forgetting about the added costs. Buying a home isn’t just a matter of replacing a rental payment or smaller mortgage payment with a much costlier mortgage payment. There are also maintenance costs, utilities (which will likely cost more) and property taxes. We tend to forget that with a bigger home comes more costs in utilities, with a new location, comes a larger cost for taxes and an increase in insurance. Budgeting for that new home will help you in the long run.
Buying a home can be both exciting and daunting at the same time. But because there is so much on the line, financially speaking, you’ll want to make sure that you do your research and speak in detail with a financial representative. This will help you to avoid these costly mistakes and help you fully enjoy your new home.
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Until next time,