If you go back to when you were buying your first home, or if you are a first time homebuyer reading this article, then I am going to run through a handful of First Time Homebuyer Mistakes. Purchasing your first home is a step in our life we all take, but if you make a mistake or two along the way, you can lose out on your home or be disappointed with the end result.
First Time Homebuyer Mistakes includes the pre-approval. This is one of the first things you need to do when preparing to purchase a home and that is to get a solid pre-approval from your lender of choice. If you choose a lender like myself at Loan Consultants, we will take a deep dive into your financials and credit history to ensure and be confident that we can make the loan happen for the amount of the pre-approval. Don’t get your pre-approval from a lender who doesn’t do a thorough check of your financial situation and credit. Also, definitely do not make an offer with only a pre-qualification letter as this doesn’t take any of your history into consideration. When you get a pre-approval done the correct way, you should feel confident in offering within that pre-approval and a loan to take place.
Another of the First Time Homebuyer Mistakes is not knowing exactly how much you can afford before shopping for a new home. Just because you THINK you know what you need to purchase a home doesn’t mean you will get approved when you go to a lending institution for a loan. Let’s use an FHA Loan for an example and if you have a 625 FICO credit score you will have a 56.9% debt to income backend ratio which means your monthly debt obligations with the new home can be up to 56.9% of your monthly gross income. Now if you were to come in under a 620 FICO credit score at 617 FICO, you will now be able to have a 43% backend DTI ratio which limits your purchasing power significantly.
These two First Time Homebuyer Mistakes work hand-in-hand. Let’s first start off with the use of counteroffers while working a real estate deal. Let’s say for example the seller and yourself are $20,000 or so apart on price, but if neither of you are willing to materially change the offer, then this process will turn frustrating and exhausting. If all you are going to do is increase your offer $1,000-$2,000 at a time, this will upset the seller and have them not want to do business with you. After finally agreeing on a sale price if you are not flexible with the move-in conditions, you might upset the buyer that the deal might fall through as well. If the buyer wants the move-in date to be in 60 days and you are pushing for 30 days and can only do that, you might irritate the buyer enough to where the deal could fall through. With transactions of this magnitude, you need to give and take in order to make things happen.
If there is one thing I can say about First Time Homebuyer Mistakes it is the fact that you need to take your time and ensure you are doing things properly and in everyone’s best interest. When in doubt, you should be working with a professional like myself at Loan Consultants who can guide you through your home purchasing transaction on a daily basis. If you are in need of assistance, please reach out at 888-900-1020, email me at email@example.com, or visit my website www.loanconsultants.org.