As the weather warms up, so do home sales. If you are dreaming of buying your very first home, steer clear of these common pitfalls:
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Not preparing for additional costs. Paying for a home involves more than a mortgage payment. Set aside room in your budget for expenses like property taxes, homeowners insurance, HOA fees and lawn care. You should also have a cushion in your savings for home maintenance and repair.
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Ignoring your credit score. Your credit score directly affects the interest rate you receive on a home loan. Improve your FICO® Score* by paying off credit cards and collection accounts, making timely payments and avoiding new lines of credit. Find out more at myfico.com.
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Skipping prequalification. Kara Loftus, AVP Mortgage Sales at Mountain America Credit Union, recommends, “Get prequalified for your home loan first. This will help you know what you can afford before falling in love with a home outside of your budget. Generally, your monthly housing expenses should not be more than 28% of your income.”
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Using the seller’s realtor. Get an expert to advocate for you and guide you through inspection, contracts and negotiation. Using the seller’s agent may create a conflict of interest. Ask friends, family or your lender to recommend a realtor they trust.
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Skipping the inspection. When you find the home of your dreams, you may be tempted to charge forward as quickly as possible, but skipping the home inspection can lead to costly problems later—like mold or a leaky roof.
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Taking out another loan before closing. Lenders will pull your credit right before closing to ensure your debt-to-income ratio has not changed since you were preapproved for the loan. If you finance a whole new set of furniture before closing, the contract may fall through.
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Refusing to compromise. Sometimes, to stay in your price range, you may have to let go of some of your preferences and see the potential of an ugly-wallpapered duckling. Make a list of your must-haves and try to be flexible on the rest.
There is a lot to consider when buying your first home. Mountain America Credit Union is here to help. Our team of mortgage experts will guide you through the homebuying process, helping you to have an easy, worry-free experience. And, with our first-time homebuyer program, you won't have to make a huge down payment.
*FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.