As Millennial loan consultant David Wickert likes to say, “Nobody goes to mortgage class in high school.” By this, David means that it’s perfectly normal for home buyers to not know all the ins and outs of the mortgage world and home buying process. After all, that’s what the experts at Accunet are here to help you with, and it’s also what sets us apart from the other mortgage companies that tout automated convenience even if the buyer has no clue what they’re doing.
With that in mind, Accunet has seen its fair share of first-time home buyer oversights over the years so we’ve put together a new list of the seven most common mistakes that first-time home buyers make.
7 Common Oversights Made by First-Time Home Buyers:
Not Considering Renting as a Better Financial Option
Contrary to what many believe, while owning a home is partially a financial decision, it is arguably more of an emotional one. Say you’re making a small down payment of 3%, and you’re not planning to stay in the property at least five years. In that case, we’d recommend not buying a home because the economic friction involved in you selling your home after such a short period will most likely result in little to no benefit for you.
Thinking You’ll Get a Better Deal by Contacting the Listing Agent Directly
We like to call this one putting the cart before the horse. To put it in perspective, think of it like shopping for puppies. Even if you’re not ready, if you go puppy shopping, you’ll most likely fall in love with one and want to take it home despite it not being in your best interest. This same thing applies to shopping for homes. We will hear stories of couples that start shopping for homes by going to open houses with a listing agent. The problem arises when you fall in love with your dream home, but then you’re stuck with the listing agent since they have the rights to you as the buyer, and they certainly won’t let another agent come in and represent you even when that would be to your benefit.
You’re Not Prepared to Compete Against a Cash Buyer/a Buyer with a Larger Down Payment
Being prepared is the key here, and that’s why we always recommend Accunet’s Rock-Solid Guaranteed Pre-Approval. Having that piece of paper along will allow you to be in the same spot as if you had a larger down payment.
Putting the Car Before the Home
We see this situation far too often. Fresh college graduates are joining the workforce and want that fancy new car. It comes with a hefty, say $600 a month, payment, but they think it’s worth it. That is until it’s time to buy that first home, and they realize that rather large monthly car payment is putting a big dent in your home purchasing power.
When arriving at your maximum house payment, you simply take your gross income and then subtract all the other payments you’re making on other debts. Car payments and student loans tend to be the biggest hits here, which also reminds us to let those recent college grads know that even though you may have an income-based payment plan for your student loans, mortgage lenders can’t use that number and will instead use 1% of your total debt.
Falling in Love with the Idea of Buying a Foreclosure
In the case of foreclosures, everyone likes a deal. But you need to really make sure you’re getting a deal rather than sinking your hard-earned cash into a potential money pit. If you’re not a contractor and know what to do, and especially if you don’t obtain a real estate condition report, then you’re flying into it blind and putting yourself at risk.
Being Too Timid on Monthly Payments
At this very moment, mortgage rates are likely to be at the lowest they will be for at least the foreseeable future. So buying as much house as you can with the current low rates are certainly in your best interest, because that number will only be going up.
Putting Too Much Emphasis on Saving for a Larger Down Payment
It’s a seller’s market out there, and competition for buyers is fierce. Many believe they need a large down payment to not only attract the seller but to also avoid that dreaded PMI. What these home buyers don’t realize, however, is that Accunet has several programs offered that can get you in up to a $424,100 home with just a 3% down payment with no income limits.
You can even get as low as 0% down payment through the WHEDA program if you fit the income limit criteria which is no more than $73,300 annual combined household income or $84,295 if you have a young child.
There you have it – Accunet’s seven most common oversights that first-time home buyers make. The moral of the story here is that you don’t have to know everything about the mortgage world when buying your first home, but making sure you are working with an expert who is can be the difference between getting the best deal possible and sitting with unintended and potentially disastrous consequences.
If you’re looking to purchase your first home, just click on that Blue Button to get connected with the experts at Accunet Mortgage.