7 First Time Home Buyer Mistakes and How To Avoid Them

Buying your first home is an exciting experience. It’s a big commitment to not just a piece of property but the area it exists in and the surrounding infrastructure. Because of this, it’s important not to get so carried away with the excitement of shopping for a home. Don’t overlook the more serious aspects that might determine your quality of life for another 30 years. These are some common first-time home buyer loans in San Diego mistakes and how to avoid them.

1. Not Estimating Full Housing Costs

More often than not, renting is more affordable in the short-term and more expensive in the long-term. Buying a home is more expensive in the short-term, but you build equity over time. So, what is it that makes homeownership expensive outside of your mortgage? Common contributing factors include insurance, repairs, HOA fees and property taxes. Ensure your housing budget includes all potential costs and some wiggle room.

2. Maxing Out the Budget

Your bank might say you can afford a $1,00,000 house, but it doesn’t mean you should try to buy one in that price range. Instead, always start at the lower end of your budget. The more money you have left over from your budget, the lower your monthly mortgage will be. This increases your likelihood of being able to cover the additional housing costs identified above. Finally, not maxing out your first mortgage makes it easier to qualify for a second mortgage for a vacation home or income property in the future.

3. Not Seeking Out Special Programs

There are programs all across the US aimed at making homeownership more affordable. Some of these programs are state-level, while others are community-based. You might even get access to privately run organizations that provide grants. If you are a first-time home buyer in San Diego and you are also a civil servant, veteran, teacher or minority, there is a higher likelihood of programs available to you. Grants might also exist for solar installment and other sustainability measures.

4. Mismanaging Debt

Homeowners with student loans and other debts often feel they like will never qualify for a mortgage. The only entity that can give you a final answer is your broker or your lender. If you have your debt under control and on top of your payments, reconsider trying to pay off all your debt before applying for a mortgage. That said, high credit card debt is likely to make it difficult for you to qualify for a loan. The bank will also consider your monthly debt load versus your monthly income to determine your loan size, so keep this in mind.

5. Not Talking to a Lender Before Buying

Once you start looking at homes, there’s a high likelihood you will find one you want. If you have not yet applied for a mortgage or consulted with a lender, this could lead to devastating results. You could find out that you’re not eligible for a mortgage and may need a few more months to get your affairs in order. Similarly, you could qualify but someone who was already prequalified gets the seller’s attention because he or she can close faster. Get pre-approved or talk to a lender before beginning the house hunting in earnest.

6. Not Researching the Area

Gentrification has led to the creation of beautiful homes in some volatile areas. It’s important to note that not all hostile areas fit the stereotypical notion. Some of the most beautiful neighborhoods have a long history of break-ins and violent crime. Research the community and surrounding areas to ensure you know exactly what you’re getting into. If you have children or plan to grow your family in the near future, be sure to research the schools.

7. Not Shopping Around

If one lender approves you for a mortgage, chances are that several others might too. Wouldn’t you like to find out what their mortgage rates look like? The best way to do so is to shop around. Using one mortgage broker can reduce the complexities of doing so while still ensuring you get the best interest rate possible. Note that once you start shopping around, you have a small window of time where multiple mortgage-related queries will count as one.

At National Home Loans, we are always available to answer your questions about first-time home buyer loans in San Diego. No question is too simple or too silly to warrant an answer from our team. If you feel compelled to ask it, we hold ourselves accountable for answering it. Contact us for more information or to get your loan process started.

Source:

https://www.nerdwallet.com/mortgages/how-much-house-can-i-afford/calculate-affordability