22 Jul The 5 Most Common Mistakes Among First Home Buyers
Buying your first home is exciting and a bit daunting. Your aim is to purchase a dream home at a price you can afford, but unfortunately, many first home buyers do things that prevent them from achieving that goal. Here are the 5 most common mistakes first home buyers make and we hope this article will help you avoid these mistakes.
1.Not getting pre-approved for a mortgage
It’s more fun to view homes than it is to meet with a Mortgage Adviser. However, without knowing how much you are able to borrow, you might find yourself looking in the wrong price range or lose a property when competition is fierce. Getting pre-approved is one of the most important parts of the home buying process.
With a pre-approval offer, you haven’t borrowed any money from a lender yet – it’s a conditional approval showing the lender is happy to lend you up to a certain amount of money. We recommend that you apply for a pre-approval before visiting your first open home, as it gives you a clear idea of how much you can afford. Knowing your borrowing capacity gives you a specific price range to look within and helps you budget realistically. On top of that, a pre-approval also allows you to buy at auction and puts you in a better position to negotiate.
2.Talking to only one lender
First home buyers might talk to only one lender they have “always banked with”, potentially finding themselves being declined or losing their opportunities to get better deals. Lending criteria and risk appetite are different from bank to bank and change regularly. If one lender rejects your application, another may be able to help. In addition, different lenders have different mortgage products, all of which have different interest rates and structures. Finding your way through this maze is not always easy. Mortgage Advisers know what lenders like and dislike, and which lender is most likely to say yes to your unique situation. And they can offer broad advice on the latest lending climate & home loan options, liaise with a variety of lenders in securing a deal, and find a product tailored to your personal circumstances.
3.Not checking your credit score
When it comes to getting a mortgage, one of the most important factors is your credit score. First home buyers often learn this lesson the hard way. A good score will help you get approved and have the most favourable terms. You should make sure you do not do anything, like opening new credit cards or applying for new personal loans, to drop your credit score when you are applying for a mortgage. Check out our article on how to improve your credit score to get better loan terms!
4.Underestimating the costs
Another common mistake first home buyers make is miscalculating the costs. There are a lot of additional expenses that come with a home purchase, such as repairs, maintenance services and insurance. You should have some savings to handle all these things, so they will not come as a surprise and put you in the red.
5.Not consulting a professional before submitting an application
Accessing the right knowledge is one of the most important things of a mortgage application, and using a Mortgage Adviser is probably the simplest way to get helpful advice. From tips for saving your deposit to advice on debt management, Mortgage Advisers can detect things that might alert lenders and provide a number of options to bring you within the lender’s criteria and qualify you for a good interest rate & mortgage structure. In other words, they can offer you something beyond what you could receive if you went direct.
In addition, it pays to be organised and detail-oriented when preparing your mortgage application. An application with a lot of errors or without the documentation required would only get you nowhere. At worst, you could be declined and then you will have to disclose this to the next lender. The great part of working with a Mortgage Adviser is that they can help you with the paperwork to ensure you are in the best position to gain an approval.
WORKING WITH A MORTGAGE ADVISER
Buying your first home is a big deal and we are here to help you steer clear of many of the mistakes on this list. Mortgages are what we do –so we know all the things to look out for. If you’re looking for someone who will work hard to help you into your dream home, then email us today or call us at 05086295626.Contact a Mortgage Adviser
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