Buying your first home can be stressful. Saving for a downpayment. Being approved for a loan. Finding the right real estate agent. Should you buy a fixer-upper or a move-in ready Tucson home? There are so many decisions to make in the home buying process. You don't want to make a misstep somewhere along the way and lose out on your dream home. So, keep these common first-time homebuyer mistakes in mind when you start looking.
Common First-Time Homebuyer Mistakes
Avoiding the Credit Check
Your credit score makes up a huge part of whether or not you get approved for a mortgage. One of the common first-time homebuyer mistakes we see is when buyers avoid checking their credit. According to a CNBC report, more than 20% of consumers show a "potentially material error" on their credit report. That's more than one in five people. Some credit reports show multiple errors. These mistakes could drastically lower your credit score, making it difficult to secure funding for a new home. Request your free credit reports from AnnualCreditReport.com right away. Review your report from each of the three main reporting agencies. If you find errors, contact the agency reporting it right away. You must show proof of the error when you dispute it. For more information, read my Credit Score Tips for the Tucson Home Buyer blog post I wrote for valuable tips and links to where you can dispute reporting errors.
Thinking Only About the List Price
Next, the sale price isn't the only thing to look at. Another one of the common first-time homebuyer mistakes we see in the market is buyers focusing only on the list price. Don't forget that there are other expenses involved in buying a Tucson home, too. You'll need to pay for a home inspection, an appraisal, closing costs, etc. Then, once you move in, you'll have to pay homeowner's insurance, HOA fees (if applicable), and maintenance costs among other things. These "hidden costs" all add up. So, add these into the equation when trying to figure out how much home you can afford.
Not Shopping Around for a Mortgage
While a 30-year fixed-rate loan tends to be the most popular among buyers in today's market, it may not actually be the best option for you. Don't make another common first-time homebuyer mistake by not shopping around for your mortgage loan. FHA, VA, conventional, fixed-rate, adjustable rate, 15-year term, 30-year term. So many choices! Then, there's the interest rate to consider. Different lenders offer different rates. An adjustable rate might work best for someone who only plans on being in the home for a couple of years before selling it. Fixed-rate works better if you plan on staying for a while. Talk to various lenders (starting with your current bank) to see which type of loan and terms work best for your homeownership goals.
Being Unrealistic About What You Can Afford
Finally, take a good look at your current lifestyle and budget a new home accordingly. Just because a bank says that they'll lend you $500,000 doesn't mean that you need to spend that much on your new Tucson home. Sit down and go over all your monthly expenses (utilities, credit cards, student loans, car loans, entertainment, etc.). Then, compare that to how much income you earn each month. To continue the lifestyle you currently enjoy, you want to make sure that your new mortgage payment easily fits in with your budget. Set the maximum price you're willing to pay for a home so that it falls within your comfort zone. Then, stick with that price limit. That way you won't struggle to make your payment once you finally move into your home.