Three Money Mistakes to Avoid When Buying a Home
For first-time buyers, having adequate finances plays a large role in the decision to become a homeowner. Bankrate.com has compiled a list of common money mistakes made by first-time buyers that you should avoid when making this major investment, while your real estate agent should also help guide you in the right direction.
1. Stretching your budget too much
While getting preapproved for a mortgage loan can be helpful when purchasing a home, spending the upper amount can be a major mistake, says the source. It is important to consider other housing expenses when selecting a home, as your mortgage is only one monthly obligation you'll have as a homeowner. Before setting out on your search for the perfect home, you should create a budget that includes estimates for other housing expenses to ensure you aren't seeing homes that are outside of your price range.
2. Not improving your credit score before applying
Even though reports say strict lending standards will begin to loosen throughout the year, a high credit score is crucial for getting an optimal interest rate. Many first-time buyers make the mistake of underestimating how important it is to work toward having a higher credit score before turning in a mortgage application. Bankrate.com notes that it is difficult to qualify for a loan without a score of at least 620, while aiming for 700 can increase your chances of getting approved.
3. Choosing the wrong type of mortgage
Another frequent mistake of first-time buyers is applying for the wrong mortgage product. While recent reports show mortgage rates are near record-lows, you should avoid signing up for a shorter-term mortgage if it will make it more difficult to pay each month. Many first-time buyers opt to purchase a home with a 30-year fixed-rate mortgage, as it provides the lowest monthly payment. While selecting a 15-year FRM is more affordable than ever, make sure this still provides you with enough money for other obligations including home insurance, taxes and the cost of maintenance.
For consumers interested in new homes for sale in Florida
, it's important they know how to move through the process. GL Homes can help consumers know what the latest trends are for homes in Florida
so they know exactly what they want in their new home.