There is no greater feeling in life than investing in a brand-new home. It provides you with a sense of ownership and control over your life. It also ensures that you are building some equity from your monthly payments in order to earn a substantial return on investment should you decide to sell your home years from now.
With all the pressure that comes with buying a new home, first-time buyers have a tendency of making crippling financial mistakes that could potentially compromise the value of their investment.
4 Common Mistakes
The following mistakes are just some of the most common ones committed by first-time homeowners.
- Picking the wrong lender.
The lender is one of the most important aspects of buying a new home it will determine the mortgage interest rates, the terms of the loan, and mortgage insurance. There are some lenders out there that work mainly with first-time buyers, which is why a good idea to find one. They will be more transparent, direct, and will make sure that you fully understand all the terms and conditions of your loan.
- Blind trust in online information.
We are living in the age of online shopping, and the real estate market knows it, you can even visit a home via the internet. It certainly has multiple advantages, however, the information you’ll find should be treated carefully. Some sites give estimated prices of the homes they advertise but fail to take into account factors like local market conditions. They can also miscalculate your mortgage estimate. Although the internet makes things a bit easier, the information you find should be handled with care. Nothing compares to sitting down with a Red Deer mortgage broker who can walk you through all of your different options.
- Biting more than you can chew.
If you are qualified for a substantial loan, you may be tempted to pick the biggest house you can find, but that is a mistake, if you don’t want to be tied up in debt for the rest of your life, keep your dreams as realistic as possible and pick a house you can afford after all expenses have been covered. Many people also forget to make sure that their life insurance can cover their mortgage as well, Harris Insurance would be a good example of someone to confirm that.
- Making a small down payment.
The current market allows for a minimum down payments of 5%. It may sound good but opting for the minimum means you will have to pay PMI every month on top of higher interest rates, depending on the lender you are using. You can use this mortgage down payment calculator to see how much you will need for a down payment according to the price of the home you are looking at.
The best advice anyone can give you would be to become an expert on home ownership and everything it entails before you set out to hunt for a brand-new home. This way you can avoid making financial mistakes that will cripple your investment in the future.