09/02/2010 With no experience in the real estate industry, first time home buyers must step carefully to avoid mortgage mistakes. We've covered ten potential threats in our previous articles. Our guide outlines five additional mistakes below.
Read on to discover five more things that many first time home buyers do wrong.
11. They take on a mortgage that's too big for them. This is the classic mistake. Many first time home buyers stretch their resources as thin as they possibly can in order to get the home of their dreams. This can work, but you're setting yourself up for failure. A home purchase will land you with more than just a mortgage payment every month. Don't forget about property taxes, maintenance, and other expenses. If you can barely afford your monthly mortgage payment, you're already underwater. You just don't know it yet. Set a budget and stick to it while you're hunting for a house.
12. They don't provide the proper paperwork. Have you ever heard of a homebuyer who missed his or her own closing date? It happens. If your lender asks for documentation or other paperwork, provide it. Don't wait. You're crafting a deal that will involve hundreds of thousands of dollars changing hands. Don't screw it up by handling the paperwork wrong.
13. They hide things about their finances. Don't ever do this. Your lender needs to know all the details of your financial situation in order to prepare a mortgage deal that will best meet your needs. Your credit score is important, but your lender may need to know more than that. If you cover up hidden debt or fail to disclose certain financial obligations, you could end up in trouble both financially and legally. Tell your lender everything he or she needs to know about your finances.
14. They forget about closing costs. This is possibly the single most common mistake made by first time home buyers. Closing costs are not small costs. You'll likely end up paying about 4% to 6% of the purchase price of the home in closing costs alone. This must be paid out of pocket. That means either cash or check. And this is in addition to the down payment that you'll be making on the same day. Do you have money saved for a $10,000 closing cost expense? If not, don't try to close a mortgage deal.
15. They make late payments. You survived the closing costs, you got one of the best mortgage rates available, and you're settling into your new home. Great. But don't forget to make the payments on your mortgage. You'd be surprised how often this happens. You're not a renter anymore. Your payments don't go straight to a property manager in a tiny office on the other side of the apartment complex. You're dealing with a bank now, and probably a large one. Banks don't tolerate late payments. Make sure you pay on time every month. If you can get this down, you're set for life.
The past three articles have covered the top fifteen most common mortgage mistakes made by first time home buyers. Now you know what to watch out for. Get out there and find the home of your dreams!
