THREE BIG MISTAKES FOLKS MAKE WHEN THINKING ABOUT A HOME PURCHASE
I have been in the mortgage business for over 13 years. I talk to folks thinking about buying homes in Maryland every day. I find that sometimes these folks just are not ready to purchase, too often, these mistakes can be avoided. Today I am here to share three BIG mistakes that folks make when thinking about a home purchase.
Falling in love with a home before determining how much they can afford.
It’s always fun to browse on line or stop by open houses, but when it’s time to get serious it’s important to find out where you stand financially. It’s hard to compare the $400,000 home that you loved to the $200,000 home you can afford!
Don’t let this happen to you!
Talk to a lender, be open and honest about your situation. If they don’t ask to review ALL of the financial documents that could have a bearing on your approval, move on. Find a lender who will help you to navigate the process. Find a lender who will review your credit score to see if there are any steps you can take to improve your scores for a better loan. Find a lender who cares about you and helping you to get the best loan
Mistake # 2
Considering the maximum they qualify for instead of what their comfortable monthly payment might be
Consider Your Lifestyle-Don’t be house poor! What do you like to do? Go out to eat, special hobbies, kid’s education, savings? What additional expenses are coming up? New car, new baby? In-laws moving in? Will you be getting a raise? A new job? A second income? An inheritance? All of these things should be considered.
What is comfortable? Only you can answer this question!
Don’t forget to speak to your tax advisor about the tax benefit of homeownership, this may help stretch the budget.
Speaking of budget, that leads me right to the third mistake.
Failing to budget.
You may be amazed at how many bank statements I review that the outgo matches the income almost to the penny-Starbucks every day, McDonald’s, Old Navy, Target. Folks forget to save money. $5 here, $10 there adds up and could keep you from buying a home that you love!
TIP: Overdrafts can be a loan killer…keep track of those purchases and DON'T overspend!
Many folks thinking about a home purchase consider the down payment (Did you know you DON'T need 20% down to buy?), but they don’t consider out of pocket expenses, earnest money deposits, appraisals, home inspections. They forget about the cost to purchase including closing costs, prepaid expenses and setting up escrow accounts for homeowner’s insurance and property tax payments. The seller can contribute toward closing costs, if negotiated into the contract. How much they can contribute can depend on the type of financing.
In some cases, owning a home will cost less than renting. In others, folks are moving up and moving out…this means more monthly and bigger annual and one-time expenses than you may be used to, more maintenance costs and higher utility bills. Don't forget about those unexpected expenses when something breaks down or needs replacing, you won't be able to call the landlord! Budgeting is key to being ready for home ownership!
If you are thinking about buying in a month or in a year, talk to a great lender in your area to find out where you stand and what steps you can take to be MORTGAGE ready.
If you are buying in Maryland, my brother Tony and I would love to help you. If you are buyinng elsewhere, we also are happy to refer you to a lender who can help!
You can reach me at 410-960-2061 or find me online at www.marylandmortgagemama.com