Buying your first home is one of the most important moments in your life, and a dream come true for many. However, it is an area in which relatively few of us are prepared, and mistakes can cost us in a variety of ways. Here are 4 mistakes people make when buying their first family home. We’ll also explain how to avoid making these mistakes yourself.
Not Cleaning Up Your Credit in Advance
Your credit score shouldn’t affect your self-worth, but creditors do use it to determine your creditworthiness. Before you start home shopping, check your credit score. Catch up with those bills, and settle those little accounts you forgot about. You may need to get on a budget and pay down your debts. This will improve your credit score and the debt to income ratio used to determine how much house you can afford.
Going in Ignorant about the Terminology
There is a general lack of understanding of the difference between freeholds and leaseholds. Leaseholders have to pay ground rent and other service charges in addition to the mortgage. Don’t buy a leasehold property unless you can afford these fees. Others choose a freehold just to be able to do what they want to the property instead of having to ask for permission.
Not Getting Pre-Approved for a Mortgage
Get pre-approved for a mortgage before you start looking at homes. This mortgage in principle or agreement in principle shows that the mortgage lender will approve a home loan up to a certain amount.
This will speed up the mortgage application process and closing on your home. It also shows home sellers that you’re serious. This increases the odds you’ll close on the home you want. Furthermore, this prevents you from going over what you will be approved for in a bidding war. Note that getting a mortgage in principle won’t impact your credit score, and you don’t have to pay for it.
Not Taking All of the Costs of Homeownership into Account
A common mistake is failing to take all of the costs associated with homeownership into account. Make sure that you have a clear idea of how much you can expect to pay for things such as property taxes and homeowner’s insurance. Comparison websites will allow you to check insurance offers in the UK. You’ll be able to do a home insurance comparison to determine how much the level of coverage you want will cost.
Don’t forget to factor in home maintenance, either. As a property owner, fixing that broken hot water tank or roof is your responsibility. Another mistake is failing to account for all of the associated costs with homeownership. Do some rough estimates to know how much you’ll spend on furniture, appliances and moving costs. Then determine how you’ll pay for these things in addition to the down payment on your new home.
While most home buyers know to do their research regarding the area, it is other mistakes that cost them their dream home or result in them paying much more than planned. Invest time in preparation to avoid making these mistakes.
Disclosure: This is a featured post.