For most people, purchasing a home is arguably the most significant financial undertaking in their lives. However, with so many documents to gather and so much else to worry about, this time can also be one of the most stressful. First-time homebuyers can feel more confident about their decisions if they remember to avoid these four common mistakes.
Not receiving preapproval
It’s common for many first-time buyers to want to get ahead of themselves by shopping for a home, before getting preapproved by a bank or mortgage company. Buyers who are not preapproved by a mortgage lender are unable to properly determine how much of a house or mortgage they can truly afford. If Buyers are working with an experienced Realtor, the Realtor will almost certainly tend to the preapproval process. Without a preapproval letter from a licensed lender, the buyers will find it impossible to convince a seller to accept their offer.
Outspending your budget
Purchasing a home that is outside of the budget is another common error made by first-time buyers, even if they are preapproved. This is mainly due to the fact that mortgage lenders will use your debt-to-income ratio to determine your budget. However, there are “real life” expenses not included in your lender’s debt-to-income ratio calculation which can be substantial, such as groceries, childcare, and insurance. These additional expenses can significantly impact your budget and cause overspending, especially if you have children or care for an elderly or ill family member.
Declining the home inspection
Finding your dream home and having the seller accept your offer is an achievement worth celebrating. You may even be tempted to rush through the rest of the process to close and move in as quickly as possible. But, to ensure you are making the right decision, it’s ALWAYS best to conduct a complete home inspection. Buyers who move forward without an inspection could be missing major issues that are not obvious or apparent, perhaps resulting in substantial costly repairs post-closing. Hiring a professional inspector to evaluate the property can alert you to serious problems which should be either corrected by the seller or avoided altogether, thereby giving you peace of mind.
Forgetting about first-time buyer programs
One benefit of purchasing your first house is being able to apply for a first-time home buyer grant. Specifically, in New Jersey, first-time buyers could receive special interest rates on their mortgage loan or up to $15,000 for the down payment on their home. Failing to research these options could cause prospective buyers to leave money on the table.
The process of touring and purchasing a home can be overwhelming for many first-time buyers. Prospective buyers who are in the middle of the process, or just beginning, can gain some reassurance by contacting the knowledgeable real estate attorneys at Mariano & Coiro, P.C., by emailing us,
or calling 732-860-7620.