![\"Scrabble](\"http:\/\/s3.amazonaws.com\/citybuzz\/2015\/06\/mistakes-homebuyers\/10-First-Home-Buyer-Mistakes-1.jpg\")
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Unless someone has the ability to pay for the home they\u2019re looking at in cash, they\u2019re going to have to take out a home loan. Getting approved for a loan, how much you can take out on the loan, the interest rate, and monthly payment on the loan is highly contingent on the borrower\u2019s credit score number.<\/p>\n
With future plans of house hunting<\/a>, whether it\u2019s six months, a year, or even two years away, the best financial move everyone can make is ensure their credit is clear of any discrepancies. Paying down outstanding debts and balances on accounts while also making sure to meet at least the minimum payments on time on all monthly bills is crucial. The higher the credit score, the lower your monthly payments.<\/p>\n It\u2019s easy for home buyers to assume what they can afford and to just start looking without taking the steps through the lender first, but it\u2019s not the smart move. Most real estate agents won\u2019t show potential homes<\/a> without a prequalification letter to in hand. And some won\u2019t do anything without the pre-approval<\/a>.<\/p>\n While basically the same thing, there are differences between getting pre-qualified and pre-approved which is why the latter is taken more seriously.<\/p>\n Many first-time home buyers make the mistake of assuming that just because they can afford the house, that means that they can afford to live there. That\u2019s not always the case. There are many extra costs associated with homeownership that often get overlooked by someone who is new to the game.<\/p>\n Homeowner\u2019s insurance<\/a>, property taxes that increase over time, heat and electricity for a giant house…Make sure to factor in any and all variables to your new home budget. You might just find that it comes at a price that you can\u2019t afford to pay.<\/p>\n Fixer uppers<\/a> can often seem like a great savings. Home renovation shows can do that to anyone. The problem is, though, that most people don\u2019t have a production company budget and a huge crew behind them working around the clock to get the jobs done. Without money and time, fixer uppers stay fixer uppers. Not only can the novelty wear off fast, but what seemed like a huge savings quickly starts to look like a giant money pit.<\/p>\n Be realistic and think long-term. In the end, you might just end up happier in the smaller home that was move-in ready than the giant, outdated Victorian house with the electric issues and the leaky roof and the windows that don\u2019t open.<\/p>\n When people start looking for that dream home in their dream neighborhood, many realize just how far outside their budgets dream homes can be, especially in big cities and affluent suburbs. It\u2019s tempting to continue to look for that same dream home, just in a neighborhood that might not be as good.<\/p>\n The problem is, homes in the less-affluent neighborhoods don\u2019t sell as well, especially in the current market, and many people find themselves trapped. The smarter move is to buy a home inside your price range in a decent-to-good neighborhood. It might not be your dream home just yet, but the potential to sell for a profit in a few years is much greater, which will help you on your way to landing that dream home you want in the good neighborhood.<\/p>\n The internet has become an invaluable tool<\/a> for home buyers. Searching through homes, researching neighborhoods, getting your credit score, and finding out what lenders are prepared to give has never been so easy. However, it\u2019s still not as good as getting a reputable team of professionals who can physically meet with or at least speak with you in your corner. Debt-to-income ratio is a huge deciding factor on credit scores and it\u2019s one of the first things that lenders look at when putting your mortgage together. Lenders want to know how much debt borrowers have already accumulated against their income. The more debt the borrower has, the less of a loan they will be able to get. Putting down a 20 percent down payment on a home is often mandatory these days unless you\u2019re interested in paying mortgage insurance. Many people save and scrape every last dollar they can get together for years in order to meet that 20 percent down payment figure and then as soon as they reach it, they go through the home buying process. Many people empty out their savings in order to meet the down payment, leaving themselves with nothing left over. Skipping the home inspection might seem like a quick and easy way to save money for some people. The novelty and excitement of a new home make some people feel like there\u2019s nothing that would possibly change their minds about wanting to buy it. That is until you\u2019re moved in and realize that there are major and very costly maintenance issues such as mold, termites, a leaking roof, electrical issues or foundation problems. All of these things could have been discovered with a simple home inspection. They run an average of $400 – $500 in most cases and are worth every penny in the long run. If you need to skimp on the home inspection in order to afford the house, you shouldn\u2019t be buying just yet anyway.<\/p>\n Buying a home for the first time is an exciting thing for anyone. Often, many people sign the papers and instantly begin planning how they\u2019re going to furnish and decorate their homes. But planning is as far as it should go until everything is completely finalized.<\/p>\n However, many people don\u2019t realize that lenders look at all financial information again before closing occurs to make sure that nothing has changed. And that debt-to-income ratio that they used to create your mortgage in the first place is one of the first things they\u2019re going back to check. So, hold off on any plans to buy a new car to park in that new driveway or furniture to fill the house.<\/p>\n Like This Post? You\u2019ll Definitely Love These:<\/b><\/p>\n 1. They Don\u2019t Clean Up Their Credit Before Applying For A Loan Source: Flickr user Simon Cunningham Unless someone has the ability to pay for the home they\u2019re looking at in cash, they\u2019re going to have to take out a home loan. Getting approved for a loan, how much you can take out on the loan, the interest rate, and monthly payment on the loan is highly contingent on the borrower\u2019s credit score number. With future plans of house hunting, whether it\u2019s six months, a year, or even two years away, the best financial move everyone can make is ensure […]<\/p>\n","protected":false},"author":7,"featured_media":1309,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[238],"tags":[],"class_list":["post-52411","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tips","post--single"],"yoast_head":"\n2. They Don\u2019t Take The Time To Get Pre-Approved Before House Hunting<\/h1>\n
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3. They Take On More Than They Can Handle Financially<\/h1>\n
![\"A](\"http:\/\/s3.amazonaws.com\/citybuzz\/2015\/06\/mistakes-homebuyers\/10-First-Home-Buyer-Mistakes-2.jpg\")
<\/p>\nSource: Flickr user Aaron Jacobs<\/div>\n4. They Get Into A Fixer Upper They Don\u2019t Have Time Or Money To Fix<\/h1>\n
5. They Prioritize The Home Over The Neighborhood<\/h1>\n
![\"A](\"http:\/\/s3.amazonaws.com\/citybuzz\/2015\/06\/mistakes-homebuyers\/10-First-Home-Buyer-Mistakes-3.jpg\")
<\/p>\nSource: Flickr user jeweledlion<\/div>\n6. They Put All Their Eggs In The Online Basket<\/h1>\n
\nGet a great real estate agent, a good loan officer that you trust, and possibly even a lawyer if necessary. Drive around town with your real estate agent and look at neighborhoods in person. Meet with your loan officer to get the facts.<\/p>\n7. They Wrack Up Debt Before Getting The Mortgage<\/h1>\n
![\"A](\"http:\/\/s3.amazonaws.com\/citybuzz\/2015\/06\/mistakes-homebuyers\/10-First-Home-Buyer-Mistakes-4.jpg\")
<\/p>\nSource: Flickr user Mighty Travels<\/div>\n
\nMany people start off their adult lives with a significant chunk of student debt. Paying that down as much as possible or off completely will help significantly improve your debt-to-income ratio. Also, consider buying used cars in order to avoid taking out a car loan until after you have your mortgage.<\/p>\n8. They Spend All Their Money On The Down Payment<\/h1>\n
\nDon\u2019t paint yourself into a corner where you\u2019re forced to live paycheck to paycheck, up against the very edge of your budget. Either allow some extra time to keep building savings that will give you somewhat of a cushion, or put down a slightly lesser down payment on the home and opt for the mortgage insurance. Never leave yourself without a little something for a rainy day, no matter how much you love a house.<\/p>\n9. They Skip The Home Inspection<\/h1>\n
![\"Men](\"http:\/\/s3.amazonaws.com\/citybuzz\/2015\/06\/mistakes-homebuyers\/10-First-Home-Buyer-Mistakes-5.jpg\")
<\/p>\nSource: Flickr user Justin Baeder<\/div>\n10. They Make Another Big Purchase Before Closing<\/h1>\n
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