Today’s mortgage rates are attracting new buyers into the real estate market. Low rates make your mortgage payment more affordable and drive up the demand for local real estate.
If you’re a first time home buyer, don’t let the house hunting FOMO push you into making any of these costly mistakes. Here are some common mistakes you can avoid.
Mistake #1: House Hunting Before You Have The Mortgage Figured Out
There is no harm in searching online or checking out your local real estate, but if you go out and start seeing homes before you have strong financing, you are setting yourself up for disappointment. The house you see today could be sold tomorrow, so it doesn’t make any sense to fall in love with a home before you have financing. Make sure you know your budget and that you’ve spoken with your mortgage broker to get a preapproval for the amount that fits your lifestyle.
Mistake #2: Talking To Only One Mortgage Lender
Today’s mortgage rates are historically low, but that doesn’t mean that you should trust the first mortgage lender that comes to mind. You should do some homework and connect with a mortgage broker who can help you get approved for the best mortgage. Remember that the mortgage rate is just one part of the total cost of buying a home, and different lenders provide different levels of service and have different fees. Find a licensed professional that you are comfortable working with.
Mistake #3: Forgetting About Closing Costs
Purchasing a home has several other costs that won’t be as clear cut as the house price that you agree on with the seller. If you forget to budget for closing costs, you could run into a very stressful situation. Thankfully, first time home buyers can take advantage of rebates on Land Transfer Tax and other programs. However, the other typical closing costs include appraisals, lawyers’ fees, title insurance, and fire insurance. Every scenario is a little different, but plan to set aside 1.5% of the house purchase price for closing costs as a rule of thumb.
Mistake #4: Waiting For The Perfect House
Not to say you shouldn’t be picky for a house you love, but if you delay getting into the market while you wait for the dream home to hit the market at your price point, then you could be worse off financially. There is an opportunity cost to not being able to grow your equity. If you wait a couple of years while you search endlessly, a house that you liked may go up in price while you watch from the sidelines. Consider the benefits of building some equity for a few years until you have enough for the home you love.
Buying a home is one of the most significant financial transactions you will make. Don’t go it alone! I have helped many first-time homebuyers go through the process.
If you want to learn more about how to get into the real estate market as a first time homebuyer, contact me Nancy Bergman.