By: Mike Nilsson
Loan Officer, Manteno
HomeStar Bank & Financial Services
Phone: (815) 468-2783
Buying a home is exciting, especially when you're buying for the first time. In the midst of all of the excitement, it's easy to become blinded by beautiful back-splashes, granite and quartz counter tops, hardwood floors, and fenced-in backyards. Keep yourself in check when home shopping and be mindful of these 6 mistakes First-Time Home Buyers may make.
Before you even look at a single property, you should know exactly how much you can afford. There are several online calculator tools you can use, but these tools are only estimates. Use these tools as a guide, but then adjust the amount based on your individual situation. How much is your current rent payment? Did you meet that payment each month with ease, or was it a bit of a struggle each month? The payment you can afford right now may be a good indicator of what you'll be able to afford in your new home.
2. Counting Chickens Before They Hatch
When determining how much mortgage you can afford, base this amount on what you are earning today. That is, the income that you and your spouse earn from stable sources. If you're in your last year of law school, for instance, don't assume that you will be earning much more money in a year or two, so you can afford a larger payment. If your spouse is expecting a big promotion, don't base your mortgage payment on a potential salary increase. No one can predict the future, and although you may very well be in a better financial situation a year down the road, there is no guarantee.
3. Failing to Account for Closing Costs, Property Taxes, HOA, and Homeowner's Insurance
When you rent a home, you generally only have one payment — rent — and then maybe renter's insurance, which is optional. When you buy a place, your mortgage payment is only the beginning of an array of costs. Homeowner's association fees, insurance, property taxes and your down payment costs should all be factored into closing costs.
4. Failing to Order a Home Inspection
During your house hunt, you may find a house that looks great at first glance. Then, as you walk through a few of the rooms, you notice problems with the house — maybe the floors squeak or the kitchen island is off-centered. After walking through the house, you come to realize that someone simply put lipstick on a pig, and this house is in questionable shape.
Home inspections provide you with additional insight on the home. The inspector may find problems that you might not and you want to know these problems before you sign on. The seller isn't likely to tell you there are subtle problems with the house or the walls are poorly insulated.
5. Being Naive or Paranoid
Some first-time home buyers are naive. Overly optimistic, they think nothing could possible go wrong. If a home has a few problems, they view them as easy fixes and are unrealistic when it comes to the cost and time it takes to fix up the home. Some naive buyers may move into a troubled neighborhood, forgetting you can fix up a house, but you can't change your neighborhood or location without moving.
Paranoid buys are sometimes difficult to work with. They may not believe the price is an accurate assessment of the house's market value. They'll submit low-ball offers and then show frustration when they are consistently rejected. Paranoid buyers don't trust real-estate agents, and may even try to buy their home without an agent, which is generally an unwise choice.
6. Not Getting Pre-Approved With an Experience Lender
To keep the home buying process as smooth as possible it’s important to work with an experienced lender. HomeStar Bank & Financial Services is the #1 home loan lender in Kankakee County and growing in Will County. For answers to your home buying questions and to get pre-approved for a mortgage contact us today! Visit www.homestarbank.com, call (815) 468- BANK (2265) or stop by one of our five branches and a Loan Officer will help you.